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EDINBURGH — Global consultancy group McKinsey is at the centre of the massive corruption and state capture scandal that has engulfed the South African government and its state entities, like public utility Eskom. South African corporates have been criticised for turning a blind eye or continuing to work with companies like McKinsey that have raked in huge sums by aiding and abetting Gupta-linked entities. Standard Bank, Nedbank and Barclays Africa cut ties with McKinsey last year following the public outcry against corrupt corporates. Now Africa’s biggest lenders have been joined by global beverage giant Coca-Cola in South Africa and Sasol. Meanwhile, it is not only South Africans who now have a close watch on corporate sinners involved in Zuma-Gupta graft. The Financial Times, based in London, highlights comments from the world’s biggest soft drinks manufacturer that it will not do more business with McKinsey for now as “a major blow” for the global consultancy. Sasol has taken a similar stance on McKinsey. – Jackie Cameron
By Janice Kew and Paul Burkhardt
Coca-Cola Co.’s South African units and oil and gas company Sasol Ltd. aren’t awarding new business to McKinsey & Co. pending the outcome of corruption probes into the U.S. consultancy’s work involving the politically connected Gupta family.
The U.S. soft drinks giant and its South African bottling operation have awarded contracts to McKinsey in the past but have no historic work ongoing, a spokesman said in emailed comments on Thursday. Sasol, the world’s largest maker of fuel from coal, has two long-term projects with the consultancy but isn’t awarding new business for now, a spokeswoman said.
McKinsey said in October it had made “several errors of judgment” while working with South African state power provider Eskom Holdings SOC Ltd. and pledged to review its practices in the country. The company is accused of wrongdoing related to work with Eskom and Trillian Capital Partners, which is linked to the Guptas. The family is subject of allegations they are using their friendship with President Jacob Zuma to win lucrative contracts from state companies, which they and Zuma deny.
Sasol and the Coca-Cola unit’s decision was first reported by the London-based Financial Times. A spokesman for McKinsey didn’t immediately respond to requests for comment.
A South African parliamentary inquiry into contracts awarded by Eskom is underway, while a probe by the state’s Special Investigating Unit has yet to start.
McKinsey is advising Sasol on the digitalization of its chemicals business and on how to improve performance at the mining division, spokeswoman Matebello Motloung said in emailed comments.
Catch up with the role of McKinsey in industrial scale corruption in South Africa:
Global consulting giant McKinsey has issued a smug statement in which it distances itself from all wrongdoing in the state capture scandal. Its corporate communications team has underestimated South Africans who have been watching developments in the Zuma-Gupta plot with a keen eye. Many haven’t fallen for the spin. Dr Iraj Abedian is one of South Africa’s most respected economists. He has taken a firm stand against corporate corruption, stepping down from the board of MunichRe after it failed to cut ties with Gupta-cursed KPMG. MunichRe has subsequently dropped KPMG. Dr Abedian has previously urged business leaders to boycott companies tainted by corruption. Cutting through McKinsey corporate gobbledygook, Dr Abedian identifies three holes in the McKinsey story.
McKinsey spin doctors have failed to convince South African taxpayers that the global consultancy is an innocent in the Gupta-Zuma game of state capture. Like many public relations practitioners ensconced in plush corporate officers, McKinsey corporate communications consultants don’t seem to understand that there has been a massive shift beneath their feet. Media statements in which spin doctors aim to frame messages and tell us what to think by planting words to subtly brainwash us don’t seem to be working anymore as the previously voiceless find their voices through Twitter and other channels. This article, by Pauli van Wyk of Daily Maverick, is a message to McKinsey to rethink their strategy from massaging the messaging to taking some decisive and tough steps to clean up its reputation in earnest.
It has been a case of easy pickings for the Gupta family at South Africa’s power utility Eskom. Gupta entities have sucked huge sums out of Eskom in connection with coal deals and had plans to tuck into the vast proceeds of a massive nuclear build project with Russia. Eskom has also been a cash cow for global consultancy McKinsey, which put up with Gupta-linked local financial services provider Trillian in a lucrative and apparently sham arrangement for both companies for a period.
Dear Mr Barton
McKinsey declares that bribery and corruption are unacceptable and inconsistent with its values. You say that you expect your employees to act lawfully, ethically and in the public interest.
You go so far as to publicly state that McKinsey:
“expressly prohibit(s) any form of bribe, kickback, or any other offer of pecuniary value, or political contribution to any public official or private-sector employee, to cause that official or employee to act or refrain from acting in connection with the operation of McKinsey or to obtain a competitive advantage.
“We have strict policies and professional standards that apply to every member of the firm. Any potential breach of these ethical standards is subject to comprehensive investigation, with appropriate action taken.”
Yet, you have failed to act in the interests of the South African public by obfuscating the truth about relationships between senior employees at McKinsey and corruption-tainted players at state-owned entitites such as Eskom and Transnet.