Transnet wants R1.2bn back from McKinsey

Insists the money must be paid in full, including interest.
The American-based consultancy must rue the day it became involved with the Gupta-linked companies Regiments Capital and Trillian. Image: Shutterstock

State-owned ports and rail giant Transnet said on Wednesday night that no final settlement has been reached with McKinsey & Co and that the US-based management consultancy in fact owes it more than R1.2 billion.

The money relates to McKinsey’s entanglement in state capture in South Africa, through Transnet contracts secured by Gupta-linked Regiments Capital. Both McKinsey and Regiments Capital are among the private sector companies facing the Zondo Commission of Inquiry into Allegations of State Capture.

“Up until last night, discussions were still underway between Transnet and McKinsey, with the main point of dispute being the repayment of the substantial interest earned on McKinsey’s fees,” Transnet said in a statement, in which it also noted remarks around the matter made in a statement issued by the secretary of the Zondo Commission Prof. Itumeleng Mosala.

The R1.2bn vs R650m for Transnet and SAA

The commission announced on Wednesday that McKinsey is set to pay some R650 million back to Transnet and South African Airways in relation to fees for work it did for the two state-owned companies together with Regiments Capital.

Read: McKinsey to repay R650m, testify in SA graft probe

McKinsey has already paid back more than R1 billion related to work done for Eskom, which involved another Gupta-linked company, Trillian.

“In respect of contracts associated with Regiments Capital, the fee paid to McKinsey was a total of R688 million. In addition, according to Transnet’s calculation, the interest cost relating to these payments is close to R558 million,” Transnet pointed out.

Read: Derby punts Transnet dividend payouts and zero-based budgeting

“The amount owed to Transnet, therefore, is just over R1.2 billion, and that is what we continue to insist must be repaid in full,” it added.

“In July 2018 McKinsey agreed to return the fees earned at Eskom plus interest, in similar circumstances,” Transnet noted.

A McKinsey official is set to testify at the Zondo Commission on Thursday.

Bloomberg reported that that the firm’s chief risk officer, Jean-Christophe Mieszala, will be testifying.

Meanwhile, at the top of the Commission’s statement on the apparent McKinsey payback agreement, it highlights that the media statement came “at the instance” of the commission’s chairperson (Deputy Chief Justice Raymond Zondo).

“McKinsey & Co worked alongside Regiments Capital (Pty) Ltd at Transnet and SAA on contracts that have been investigated by the Commission. The Commission recently initiated discussions with McKinsey and is now pleased to announce that McKinsey has undertaken to repay all of the fees paid
to it for work it performed on the Transnet and SAA contracts alongside Regiments,” it said.

The Commission noted that the amount covered by McKinsey’s undertaking has not yet been fixed with Transnet and SAA, but is likely to be around R650 million.

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

“McKinsey has assisted the Commission with its investigations and has dealt with the Commission on a transparent basis. Witnesses from McKinsey will be testifying on 10 December 2020 and will be questioned by evidence leaders of the Commission,” its statement read.

“Two years ago, McKinsey repaid the full amount of the fees that it had earned on its Top Engineers MSA contract with Eskom, for work on an Eskom project on which Trillian had also invoiced Eskom. McKinsey did not work alongside either Regiments or Trillian at any State-Owned Enterprises [SOEs] other than Eskom, Transnet, or SAA,” the Commission added.



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Where are the criminal charges???

Its a bit obvious they are trying to avoid them with the negative reputation that comes with it.

Dear US Department of Justice

If you can criminally prosecute Goldman Sachs Managing Directors in connection with Malaysia, then perhaps you can do the same with McKinsey leadership in connection with South Africa? (What is it that you have against Goldman?)

It may be turn out that they committed no crime but it is something that should at least be investigated.

And once again, I ask where is the very silent one hiding???????

Tokyo, oh Tokyo where art thou?

Trillion Capital strongly linked to McKinsey and the Gupta/Zuma gang. You ran like a scalded cat when The good judge started to poke around. You have not been seen or heard of since.

You were always o vocal, but now??? Where are you hiding?

I feel like throwing up when I do my tax. Why do bother doing tax?

Lekker – McKinsey, I don’t feel for you. Famous for destroying mid-management levels, I really do enjoy this moment. Burn in hell.

McKinsey seems like a really devious and con artist company. A big disgrace on their management. Very sad why they would get involved in corruption. They can’t die with their money.

McKinsey. They come in, scavenge around for the best ideas from existing staff, repackage into Powerpoint. Preach measure, measure , measure, except of course when they it comes to their own cost/benefit analysis. Things get a bit vague then.

McKinsey, Moodys, Fitch are all from the same place, the “exceptional” USA.

The “exceptional” people according to Mr. Trump only.

Moodys and Fitch are blind to the $31 Trillion debt mountain of the USA.

To add and elaborate on your point.

Financialised businesses and countries who follow Modern Money Theory are basically against the Free Market Economy. It has devalued the dollar some 97% which is same as Expropriation without Compensation just a much more devious method of working. I prefer ABCT (Austrian Business Cycle Theory) as my main method of valuing a business and economies at any given point.

Americans Economists do not view debt as a problem nor does it effect the valuation of a business. With the core principle being idea that governments with a fiat currency system can easily print as much money as they need to spend because they cannot go broke or be insolvent unless the politicians decide that is it we are going broke.

It is also worth reading
The Skyscraper Curse by Mark Thornton

This just shows how cynical the Mckinsey Eskom apology was. While apologising for that publicly exposed situation they kept very very quiet about their dealings at Transnet. They pay back only what they absolutely have to not what they should. If you don’t have the threat of criminal charges it is human nature to pay back only reluctantly if at all.

Put jail time on the table and suddenly the NY and London Partners will see paying back the money (to demonstrate bona fides) as a very easy thing to do.

Why are the State Capture questioners being so deferential to Mckinsey when questioning them?

End of comments.




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