Best of 2017: McKinsey turns on its own as explosive SA-Gupta graft scandal erupts

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10 – July COMMENT: EDINBURGH — A corruption scandal that has pushed the South African economy to the edge and heightened social tensions appears to finally have claimed its first McKinsey scalp. McKinsey, a global consultancy firm, is caught up in the worst corruption scandal ever in democratic South Africa. The McKinsey name was highlighted in an investigation into corrupt deals involving the controversial Gupta-linked Trillian Capital Partners. At the weekend, it emerged that 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. – Jackie Cameron

Staff Writer

In America, company bosses can go to jail for corruption anywhere in the world. Yet, global consultancy firm McKinsey has taken some time to digest the news that its team in South Africa is at the centre of a corruption scandal that is threatening to derail the fledgling democracy.

This weekend, it emerged that senior figures at McKinsey have finally started taking stock of the involvement of their employees in corruption and other crimes.

As a first step, McKinsey has suspended South African director Vikas Sagar while it reviews a report put together by a leading South African lawyer on the McKinsey links in the state capture strategy being played out by President Jacob Zuma’s friends – who include the Gupta family.

Zapiro’s archival cartoon on the controversial Gupta Sun City wedding still rings true. More of his magic available at www.zapiro.com.

Advocate Geoff Budlender was brought in by Tokyo Sexwale, a former Robben Island political prisoner and leading black business player, to investigate deals at Gupta-linked Trillian Capital Partners. McKinsey employees and Trillian Capital Partners staff have not co-operated with the investigation, leading to calls by Sexwale to include Budlender’s report in a judicial inquiry into state capture.

McKinsey isn’t the only large global consultancy alleged to have benefited from corrupt deals. KPMG is also caught up in the scandal, with explosive evidence contained in the #GuptaLeaks underscoring the role of businesses like McKinsey and KPMG in corruption.

London-headquartered public relations firm Bell Pottinger has moved to apologise for its involvement in Gupta-related deals. Bell Pottinger is the architect of anti-white campaigns aimed at drumming up support for Zuma’s clique, earning more than £100 000 a month to incite violence on taxpayers’ backs.

Bell Pottinger’s apology and claim that it was played for a fool by the Gupta family and associates come to little, too late for many South African who want to see jail time for the beneficiaries of the state capture strategy.

Fin24 reports that  McKinsey director Vikas Sagar has taken a temporary leave of absence. 

“To allow our review to proceed in an open and transparent way, and to allow Vikas Sagar the time to focus on our review, we have mutually agreed with Vikas that he take a temporary leave of absence, effective 6 July 2017,” said Bonita Dordel, director of external relations Africa.

“McKinsey is reviewing a report on Trillian by Advocate Geoff Budlender, in which the firm has been implicated. Trillian’s outgoing chairperson Tokyo Sexwale called for the investigation following allegations that executives at Trillian were aware of former Finance Minister Nhlanhla Nene’s axing weeks before it happened, and that the group would secure government contracts with Des van Rooyen at the helm of Treasury.”

McKinsey suspended South African director Vikas Sagar.

Budlender’s report, released in June, details other situations related to alleged state capture, says Fin24, adding that Sexwale wants the report to be included in a judicial inquiry into state capture.

“The report explained that major state-owned enterprises such as Eskom and Transnet have a Supplier Development Programme (SDP) in which certain service providers are required to engage with local service providers, for the latter to gain experience and skills.

“McKinsey was engaged to undertake work on behalf of Eskom and Transnet. Budlender had sent written questions to McKinsey’s Benedict Phiri to enquire if the firm had partnered with Trillian as part of the SDP.

“McKinsey informed Budlender that the firm had not worked on any projects in which Trillian was an SDP or subcontractor to the firm.”

McKinsey confirmed to Fin24 that although it considered a supplier development partnership Trillian, it did not go ahead with it over concerns about Trillian’s shareholding.

However in the report, Budlender shared a letter submitted by McKinsey’s director Sagar to Eskom, in which he informed the power utility that McKinsey subcontracted a portion of services to be performed by Trillian.

Phiri told Budlender that it would look into the matter but had not submitted any new information required by Budlender at the time the report was finalized. The firm also elected not to make further submissions.

In an email to Budlender, Phiri wrote: “For clarity, McKinsey’s position is that, in light of the informal nature of your inquiry in the context of the various legal and regulatory processes around Trillian, it is inappropriate to furnish further comment with respect to this matter.”

Jacob Zuma speaks during a visit to the headquarters of Eskom Holdings SOC Ltd. at Megawatt Park in Johannesburg on May 6, 2016. Photographer: Waldo Swiegers/Bloomberg

In the report Budlender remarked that McKinsey had not provided an explanation for the inconsistency. “McKinsey has neither suggested that the letter apparently signed by its director is not genuine, nor provided any explanation for this inconsistency, despite repeated invitations to do so. It has refused to provide any explanation,” Budlender said. 

Budlender said that the matter requires further investigation, by an institution or person with “legal powers” to compel McKinsey to provide the relevant information.

McKinsey previously told Fin24 that Budlender’s findings are being reviewed and the firm is investigating the matter along with law firm Norton Rose Fulbright.

Source: http://www.fin24.com/Companies/Financial-Services/mckinsey-director-takes-leave-of-absence-following-trillian-probe-20170709-2

For more on the role of business in the state capture scandal, read:

1. Angry, disgusted SA reacts: Too little, too late Bell Pottinger – there’s blood on your hands!

Angry citizens want more than an apology. They want to see justice, with jail time for the architects of the anti-white propaganda campaigns who also enriched themselves on the backs of taxpayers. Read more.

2. Meet unrepentant Gupta tax dodge ‘lapdog’ Moses Kgosana, KPMG heavyweight

Moses Kgosana was about to take the chair at Alexander Forbes Group Holdings when his name emerged in secret emails leaked from the heart of the Gupta family empire. He has been linked to an accounting manoeuvre that facilitated state payment for an extravagant private event. Read more.

3. SA outrage as #GuptaLeaks reveal scale of Zupta spies, lies and greed. Have your say!

Protest action is slowly building in the social media, while others are using their democratic right to freedom of speech to take a stand against the corrupt president and his crooked friends who are working against the national interest. Add your voice here!

4. Inside story: How Gupta spies have put me under pressure – Peter Bruce

If seasoned journalist Peter Bruce doesn’t win through legal channels, he is determined to use the power of the pen to fight the forces of evil directed by the Gupta family in a state capture campaign that is damaging the economy and jeopardising social stability. Read more.

5. Revealed! Bell Pottinger got R5.5m for one weekend to ‘help’ ANC, MK in anti-white campaign

The #GuptaLeaks reveal that the Zupta account has been so lucrative for Bell Pottinger that it sent an invoice for just under £350 000 (about R5,5m), for a four-day trip that included a suggested speech for Collen Maine of the ANC Youth League and a statement for the MK Veterans Association. Read more.

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