You are currently viewing our desktop site, do you want to visit our Mobile web app instead?
 Registered users can save articles to their personal articles list. Login here or sign up here

McKinsey’s new boss apologises to South Africans over corruption scandal

World’s largest consultancy will this week pay back the R1 billion in fees it received for its share of the work it did with Trillian at Eskom.

McKinsey’s new global head will on Monday apologise to South Africans for work the firm did with friends of scandal-plagued former president Jacob Zuma, an ill-fated deal that tarnished the reputation of the world’s biggest consultancy.

McKinsey has lost most of its clients in South Africa since it emerged last year it had partnered with local consultancy Trillian in order to win a R1.6 billion contract with state power utility Eskom in 2016.

Trillian was then controlled by the Guptas, three brothers who are under investigation over accusations that they used their friendship with Zuma to fraudulently win government contracts worth hundreds of millions of dollars. Zuma and the Guptas deny any wrongdoing. Police have a warrant of arrest out for at least one of the Gupta brothers.

South Africa’s national prosecutor is pursuing a case over the contract between McKinsey, Trillian and Eskom which it says was unlawful and a “sham”.

McKinsey denies doing anything illegal.

Kevin Sneader, who was appointed McKinsey’s global managing partner in February, will make a speech in Johannesburg on Monday to “talk frankly and honestly” about the firm’s failings.

“On behalf of McKinsey & Company, I sincerely apologise to the people of South Africa. We are deeply sorry,” Sneader will say, according to a sample of the speech sent to Reuters.

“The trust of our clients and the public in South Africa is now, understandably, very low.”

McKinsey said it will this week pay back the R1 billion in fees it received for its share of the six months work it did with Trillian at Eskom.

Some of the criticism McKinsey has faced is over the fee it charged for such a short period of work to a struggling state company that has fallen deeper into financial crisis since the consultancy’s “turnaround programme”.

McKinsey had previously defended its fee structure but the firm is now conceding that it overcharged.

“The fee was weighted towards recovering our investment rather than being in line with Eskom’s situation. In that context the fee was too large,” Sneader says.

McKinsey is among several multinational firms to have become ensnared in a far-reaching scandal that has outraged South Africans who have watched state resources being looted while millions remain mired in poverty.

“To be brutally honest – we were too distant to understand the growing anger in South Africa,” Sneader says.

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.

COMMENTS   3

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up for FREE

If McKinsey is ‘overcharging’ for ‘state capture work’, then is it overcharging for all its work.

Can greedy firms like this be trusted to do ANY government or SOE work?

What is it doing to amend its ways going forward??

What of its partner Trillian and their CEO – Eric Wood???

If the SA state thinks what McKinsey did was illegal and criminal, then that needs to be pursued and tested through to finalisation in open court.

Wow.

A change of leadership. An apology. Paying back the money.

It’s almost like our criminals that apologise and want to give it back once caught.

But if they weren’t caught I’m pretty sure they wouldn’t be giving it back.

Giving the money back is good. But cooperating in the criminal investigation and providing evidence would be much better..

Load All 3 Comments
End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

SHOP NEWSLETTERS TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: