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