McKinsey & Company not off the hook
MCKINSEY & Company’s grovelling and repayment of R902 million to Eskom this week does not take away suspicions that the R1.6 billion contract with the power utility was mired in criminality and should be subjected to criminal investigation, Corruption Watch executive director David Lewis said yesterday.
The circumstances around the messy contract have brought to the fore questions about South Africa’s lack of regulation and accountability regarding consultants, who rake in billions of rand in the public and private sector.
Now Corruption Watch has pinned its hopes for justice on the criminal prosecution of those implicated in the Eskom tender.
The organisation last year filed a complaint about the controversial contract to the US Department of Justice, alleging that there was a criminal conspiracy between McKinsey, Trillian and Eskom in contravention of US and South African law. Lewis was yesterday unmoved by McKinsey global managing partner Kevin Sneader’s apology for the firm’s involvement in state capture.
He said Sneader’s statement raised more questions about the company’s involvement in other state-owned companies, including Transnet and Denel.
“He acknowledged that Transnet was still a mystery to them,” he said.
He said Corruption Watch stood by its assertion that the payment of approximately R600m to Trillian Capital was a bribe.
“(McKinsey) entered into a contract with a company that did no work,” said Lewis. He said the payment to Trillian was a mechanism to channel money to corrupt individuals. “That is a reasonable inference to make. This is a criminal matter. Police must investigate. You do not steal and when you are caught you apologise and say here is your money. The apology does not put this matter to rest,” he said.
Questioned Lewis said some of McKinsey’s explanations were not plausible. He questioned the firm’s decision to enter into the contract without ascertaining in writing that Eskom had National Treasury permission to deviate from its rules on fee calculations for consultants. “You do not enter into a billion-rand contract without ensuring that the client has the permission to deviate. Nobody in their right mind does that,” said Lewis.
Business Leadership South Africa chief executive Bonang Mohale said yesterday that the damage that McKinsey had caused was incalculable.
He said the damage should be seen in the context of the last 10 years of state capture, which has led to downgrades to below investment grade and introduced financial instability at once viable state-owned companies such as Eskom and Transnet.
“The damage must be viewed through the teary eyes of people such as the more than 90 percent of students at Fort Hare who are solely dependent on the National Student Financial Aid Scheme and who now cannot be recapitalised from the fiscus, putting their education at risk,” he said, adding that McKinsey should pay back the money owed to Eskom with interest and the government must apply appropriate sanctions.
“Professional bodies to which any individuals subscribe must assess whether any of their members have a case to answer,” he said.
Eskom spokesperson Khulu Phasiwe said yesterday that Eskom had not blacklisted McKinsey. Phasiwe said the global firm would still be eligible to tender for future projects “just like everyone else”.
“Eskom simply has to ensure that some of the loose ends that have been identified are tightened, so that we do not repeat the same mistakes.”
He said Eskom’s main aim was to get the fee paid to McKinsey back.