MCKINSEY’S TONE-DEAF FUDGE

The list of excuses provided by consulting firm Mckinsey this week for getting into bed with Gupta-linked advisory firm Trillian was as long as it was improbable. In a nutshell, Mckinsey argued that

Eskom lied to it when it claimed its contract had the green light from national treasury; that any mistakes Mckinsey made were unintentional lapses in judgment, mostly from departed SA partner Vikas Sagar; and that those mistakes won’t be repeated because Mckinsey has frozen its work for state-owned companies for now.

But this doesn’t go nearly far enough to explain how Mckinsey and Trillian earned R1.6bn for just six months’ work on an unlawful contract for SA’S state-owned firms.

After a four-month investigation, Mckinsey said it genuinely believed, based on what it was told by Eskom, that its contract was above board. And it offered to pay back the money rather than “benefiting from an allegedly invalid contract”.

Its hand-wringing statement was replete with heartfelt apologies about the “distress this matter has caused the people of SA, our clients, colleagues [and] alumni”. And it was at pains to claim it had “never served” the Guptas or their companies.

But it’s an argument that doesn’t hold water. It contradicts exhaustive forensic reports, board minutes and internal correspondence between Mckinsey and Trillian, seen by the Financial Mail, as well as personal testimony from key participants.

Mckinsey also hasn’t addressed evidence that Salim Essa, a key lieutenant of the Gupta family, paved the way for the suspect Eskom deal by brokering Mckinsey’s marriage with Trillian’s predecessor, Regiments, as a preferred supplier development partner. Or that Essa apparently received a hefty cut of all revenue Regiments earned from its work with Mckinsey at state-owned enterprises.

Documents confirm that Mckinsey senior partners most likely knew that Trillian was potentially conflicted in working for Eskom and Transnet, and that it had questionable black empowerment credentials and was prepared to deal with Gupta-linked firms accused of money laundering and corruption.

Yet Mckinsey linked up with Trillian anyway — its eye on a possible R9.4bn in fees.

E-mails show that after Eskom’s board approved the contract in 2015, Mckinsey senior partners Sagar and Alexander Weiss eagerly discussed how to carve up the spoils with Trillian.

One letter Weiss and Sagar sent to Trillian in December 2015 was titled “Mckinsey-trillian partnership for the Eskom turnaround”. It commits Mckinsey “to dealing with Trillian’s sub-contractors with respect and an open mind. This will include egateway [and] Cutting Edge”.

Yet, last year, investigative journalists at amabhungane revealed that Cutting Edge was owned by the Guptas and had paid money to a “Gupta front company”, Homix, which was allegedly used to launder kickbacks from state firms to offshore accounts.

Moreover, when Mckinsey asked Trillian to clarify its ownership structure, that firm’s draft response to Sagar was shared with Transnet’s head of acquisitions, Stanley Shane, who sometimes used a Trillian e-mail address for some reason.

The Financial Mail reported previously that even though Shane was a Transnet director, discussions took place to give his firm, Integrated Capital Management, shares in Trillian. In the end, these talks fell apart.

But it would have been a conflict for Shane to be a shareholder at Trillian and a director of Transnet, which was lavishing millions on Trillian. Yet Mckinsey didn’t address this in its statement this week.

The same Financial Mail report revealed that Mark Pamensky — a director of Gupta-