McKinsey & Company bosses hunt down Gupta cockroaches in SA kitchen

EDINBURGH — Global bosses at McKinsey & Company have instituted a review into thousands of documents as they probe links between their South African associates and the controversial Gupta family. The McKinsey name in South Africa has become associated with questionable deals with state entities Eskom and Transnet. An investigation by Advocate Geoff Budlender on behalf of ANC struggle veteran and billionaire businessman Tokyo Sexwale highlighted links between McKinsey & Company and Gupta entities. McKinsey leaders refused to co-operate with the probe into the role of McKinsey in facilitating payments from Eskom to a Gupta company in a sham supplier agreement. Earlier McKinsey moved to quarantine the reputational risk by suspending one employee, Vikas Sagar. But global leaders have now got involved, with lawyers assisting in the investigation to clearly establish the lines of communication and flow of information between McKinsey employees and the corrupt and captured in the Gupta net around Eskom coffers. There is a lot at stake, as US-based investigations into the corrupt practices of global companies can be punishingly expensive and time-consuming. – Jackie Cameron

By Paul Burkhardt

(Bloomberg) —McKinsey & Co. is reviewing hundreds of thousands of documents related to South Africa’s state-owned power utility as part of a probe by the U.S. consultancy that includes any interactions with Trillian Capital Partners Ltd., a company linked to friends of President Jacob Zuma.

Eskom Holdings SOC Ltd. is conducting its own investigation of work done by Trillian Capital, to which the utility said it paid 495 million rand ($38 million) as part of a corporate plan and turnaround program. Eskom interim Chairman Zethembe Khoza said last week that Trillian worked for McKinsey as a subcontractor, which McKinsey denies.

An Eskom branded flag flies alongside the South African national flag outside the headquarters for Eskom Holdings SOC Ltd, at Megawatt Park in Sandton, Johannesburg. Photographer: Waldo Swiegers/Bloomberg

The investigation “involves a detailed review of our client interactions and work at Eskom since 2012” and interactions with supply-development partners over the past three years, McKinsey said Wednesday in an emailed response to questions. Law firm Norton Rose Fulbright is helping with the probe.

The Guptas, who are in business with one of Zuma’s sons, have been at the center of allegations of so-called state capture and undue influence over government institutions. In November, South Africa’s anti-graft ombudsman published a report saying Zuma and some ministers may have breached the government’s code of ethics in their relationship with the family.

A July report into allegations against Trillian by a leading advocate showed the company submitted an invoice for 30.7 million rand to Eskom Chief Financial Officer Anoj Singh in April last year, which was paid the same day.

Salim Essa, a business associate of the Guptas, sold his stake in Trillian, the company said in a statement Wednesday, after reports about the family hindered the financial-services company.

McKinsey, which ended its work with Eskom by mutual agreement on July 10, said that all payments to Trillian were paid directly by the utility. The consultancy also hasn’t discovered anything that would require notification of U.S. authorities, it said.

Source: Bloomberg

Catch up on the role of McKinsey in the corruption and state capture scandal that has rocked South Africa:

The McKinsey name was highlighted in an investigation into corrupt deals involving the controversial Gupta-linked Trillian Capital Partners. McKinsey has suspended one individual. It’s a case of too little, too late for many South Africans who ponder why McKinsey and other companies have taken so long to take a stand against the corrupt and captured within their own ranks.

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