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McKinsey’s David Fine: ‘We’ll pay R1bn back to SA; don’t want tainted money’

JOHANNESBURG — South African-born David Fine – who is McKinsey’s Global Lead for its Public and Social Sector – grovelled before Parliament’s probe into state capture on Wednesday as he made a U-turn on the company’s previous statements regarding paying back over R1bn to South Africans (Eskom admitted in July that it paid R1.6bn to McKinsey and Trillian Capital Partners). Fine, who is now based in London, found himself having to answer tough questions in Cape Town regarding his company’s relationship to Gupta-linked Trillian, a consultancy firm that skimmed millions of rands off the back of deals with McKinsey and Eskom. In a statement issued just last month, McKinsey stood firm in announcing that it would only pay back Eskom the R1bn it earned in commission fees if a court found its deal with Eskom to be illegal. However, Fine backtracked dramatically on this statement in Parliament on Wednesday as he announced that his company would pay back the money, regardless of whether the deal with Eskom and Trillian was legal or not. He also said his company didn’t want “tainted money”. As indicated by reports, Fine further apologised, said he was embarrassed and begged MPs to go easy on his company. The questions now are whether McKinsey’s desperate capitulation and grovelling signal an admission of guilt and how soon will the company pay back the money to South African taxpayers? – Gareth van Zyl

By Thulasizwe Sithole*

Global consulting firm McKinsey plans to pay back South Africa the estimated R1bn it previously earned in commission fees from a controversial deal it had with state electricity provider Eskom.

David Fine – who is McKinsey’s Global Lead for its Public and Social Sector – made the announcement in Parliament on Wednesday. MPs were grilling him as part of a Portfolio Committee on Public Enterprises‘ probe into allegations of state capture at Eskom. Fine previously led McKinsey’s Johannesburg office from 2010 to 2014 and he was the first South African to join the office when it opened in 1995.

David Fine
David Fine

MPs, including former Finance Minister Pravin Gordhan, demanded answers from Fine regarding his company’s relationship with Gupta-linked Trillian Capital Partners. Trillian is accused of being merely a front in ensuring that McKinsey secured a R1bn turnaround consultancy deal with Eskom. In turn, Trillian is said to have earned around R600m while delivering very little actual work in return.

In the briefing, Fine denied knowing the Guptas and said his company wasn’t aware of former Trillian owner Salim Essa‘s links to the infamous immigrant Indian family. He also said he didn’t know about former senior partner Vikar Sagar’s links to Essa but acted swiftly when he learnt of it. Fine also confirmed that the Guptas had invited him to their controversial 2013 Sun City wedding but that he didn’t attend it.

“We were not involved in moving money and auditing webs. This is terribly embarrassing to us,” said Fine.

The scandal around McKinsey has grown to such proportions that the company’s head office last month issued a lengthy statement in which it said it was embarrassed by its work with Eskom but that it denied any allegations with corruption. In its statement, McKinsey further announced but that it decided to halt work with state companies in South Africa and that it would only pay back the R1bn in fees it earned if a court found it had strayed.

However, Fine made a dramatic U-turn on this last point by telling MPs that McKinsey would now pay back the R1bn regardless of whether the deal was illegal or not. Fine, though, made this promise while sticking to his company’s line that an internal investigation had found no wrongdoing.

“We don’t want tainted money. Please help us to resolve this,” Fine told Parliament, according to reports.

“We’re awaiting confirmation – do we pay the money to Eskom or South African citizens?”

Fine further explained that McKinsey had “reserved” the funds.

“Who should receive the money, and how should it be delivered?” He added.

Fine said his company had apologised to Advocate Geoff Budlender for not cooperating with his investigation into Trillian. Budlender previously said Trillian and McKinsey had failed to fully cooperate with the investigation which was launched by the former chair of Trillian, Tokyo Sexwale.

‘Please don’t punish us’

During the briefing, Fine also appealed to Parliament not to “punish” particularly young, black South Africans working at McKinsey.

“If you want to punish someone, punish me, not these young people who can bring skills and capabilities to South Africa,” said Fine.

He added: “I see the disappointment and anger in people’s eyes. I see the anger and disappointment in our clients’ eyes. And I see the fear in our young consultants’ eyes.”

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