MCKINSEY’S MISSTEP

It takes two to tango. And global consultancy Mckinsey is about to find that it may be a partner in the ugly dance of corruption that has infested these sunny shores. Things may get more interesting when the consequences of such a possibility are seen from the perspective of the US government, which has little tolerance for the kind of shenanigans in which the firm may have been involved.

Mckinsey, with its roots and major operations in the US, plays a leading role in providing management capacity to SA’S largest state-owned enterprises. Now it seems some of those services to logistics company Transnet and electricity supplier Eskom may not have been completely innocent.

In the past few years, the firm has got itself entangled in activities with the Trillian group of companies, which may land some Mckinsey executives on the radar of the US’S law enforcement agencies.

In his investigation into allegations of state capture and corruption against Trillian, advocate Geoff Budlender stumbled upon some interesting information that implicates Mckinsey in less-than-clean activities in its work with Eskom. Budlender had been instructed by Tokyo Sexwale, now Trillian’s former independent chairman, to probe whether that consultancy was involved in attempts to capture key elements of the state, including firms such as Transnet and Eskom.

The incriminating information was a February 2016 missive on a Mckinsey letterhead that authorised Eskom “to pay subcontractors directly”. In the letter, Mckinsey director Vikas Sagar confirms the company’s “satisfaction with the relevant services to be performed by Trillian to Mckinsey”. Sagar also authorises Eskom to directly pay Trillian “for any services performed by it in pursuance of our obligations” under Mckinsey’s agreement with Eskom. Sagar purportedly justifies this arrangement on the basis of Eskom’s requirement that a global firm such as Mckinsey share some of its professional services work with a local supplier. Only, this local “supplier” happens to be exactly the kind of entity that the drafters of the US’S Foreign Corrupt Practices Act of 1977 had in mind when writing the antigraft law.

This may explain Mckinsey’s reluctance to have Trillian in its own books. However, due to the mercenary-like nature of consultants, Mckinsey may have desired the lucrative contracts flowing from its association with the politically exposed individuals who own Trillian, whose majority shareholder is Gupta lieutenant Salim Essa.

When Budlender started asking questions of Mckinsey, the consultancy clammed up and declined to provide information. “In the circumstances, we have been advised that it would not be appropriate to provide further information relating to the informal investigation you are conducting into the affairs of Trillian,” Mckinsey’s Benedict Phiri wrote. He helpfully added: “We trust that you will understand our position.”

Mckinsey’s position may very well be understandable. Except, while Budlender’s “informal investigation” stopped Mckinsey from answering his questions about its arrangement with Trillian, it did not stop Mckinsey from sharing that same information with its alumni community.

Writing to that community in the wake of Budlender’s report, Mckinsey senior partner Georges

Desvaux says the firm had actively considered Trillian as a possible partner. “As a consequence of this review, we decided not to proceed because of our concerns about Trillian’s shareholding. We never entered into a formal written contract with them, and terminated any plans for future work over a year ago.”

However, Desvaux says, in May this year the firm surprisingly “learnt of a letter” written by one of its partners authorising Trillian to invoice Eskom directly.

Global consultancy Mckinsey is about to find that it may be a partner in the ugly dance of corruption that has infested these sunny shores