McKinsey pays $122mn to resolve probes into South Africa bribes
Deferred prosecution agreement covers corruption scandal involving state-owned companies during Zuma presidency
New York | McKinsey has agreed to pay $US122 million ($190 million) to authorities in the US and South Africa over its role in a sprawling corruption scandal during the administration of former South African president Jacob Zuma.
The consulting group paid bribes to win millions of dollars of consulting work with South African state-owned companies between 2012 and 2016, according to a deferred prosecution agreement announced by the US Justice Department on Thursday (Friday AEDT) and a statement by South Africa’s National Prosecuting Authority.
One of McKinsey’s former senior partners in Johannesburg, Vikas Sagar, has also pleaded guilty to participating in a conspiracy to violate the US Foreign Corrupt Practices Act, prosecutors said on Thursday. The plea was entered in a US court in 2022 but had been kept under seal while the investigation continued.
“McKinsey Africa participated in a yearslong scheme to bribe government officials in South Africa and unlawfully obtained a series of highly lucrative consulting engagements that netted McKinsey Africa and its parent entity McKinsey & Company approximately $85mn in profits,” said Damian Williams, the US attorney for the Southern District of New York.
The firm and Sagar bribed officials at Transnet, South Africa’s rail freight monopoly, and the energy company Eskom for information that helped win consulting work, US prosecutors said, by knowingly allowing local partner firms to funnel money to officials at the two state-owned companies.
McKinsey received leniency from US prosecutors in part because it had co-operated with the investigation, the justice department said.
In a statement, the firm said it conducted an extensive probe of its own into “the corrupt conduct of a former partner, Vikas Sagar, who concealed his unlawful conduct from the company and his colleagues and then sought to cover up his conduct. McKinsey terminated his employment more than seven years ago.”
The firm said it was pleased to resolve the investigations by the justice department and South Africa’s National Prosecuting Authority, and that it was committed to “regaining the trust” of the people of South Africa.
South African prosecutors have spent years investigating the systematic pilfering of public contracts, known locally as “state capture”, during the Zuma presidency, which ended in 2018.
Two years ago, an official commission of inquiry concluded that the Gupta business dynasty had used influence with Zuma to operate a “racketeering enterprise” at Transnet by receiving contracts that favoured their interests or those of associates. The Guptas and Zuma denied any wrongdoing.
