McKinsey to pay SA over R2 billion for its role in State Capture bribes

McKinsey and Co. Africa, a subsidiary of McKinsey & Company, will pay South Africa a staggering $122 million (over R2 billion) to resolve investigations into State Capture bribes which were allegedly paid by the company to SA government officials between 2012 and 2016.

In a statement on Thursday, the US Department of Justice said the settlement was reached after a member of the consulting firm was charged with conspiracy of violating the Foreign Corrupt Practices Act (FCPA).

The charge was related to allegations that the firm conspired to pay bribes to officials at SA's  state-owned entity Eskom, and freight rail operator Transnet, in return for confidential information regarding consulting contracts.

It was added that McKinsey Africa entered into a three-year deferred prosecution agreement with the US Justice Department.

The department said that Vikas Sagar, a former senior partner of McKinsey who worked in McKinsey Africa’s South Africa office, previously pleaded guilty to one count of conspiracy to violate the FCPA.

Between at least 2012 and 2016, McKinsey Africa obtained sensitive confidential and non-public information from Transnet and Eskom regarding the award of lucrative consulting contracts and submitted proposals for multimillion-dollar consulting engagements, while knowing that South African consulting firms with which McKinsey Africa had partnered would pay a portion of their fees as bribes to officials at Transnet and Eskom.

"As a result of the bribery scheme, McKinsey and McKinsey Africa earned profits of approximately $85 million (over R1.5 billion)," read the statement.

“McKinsey Africa bribed South African officials in order to obtain lucrative consulting business that generated tens of millions of dollars in profits,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division.

“As a consequence, McKinsey Africa has agreed to pay a criminal penalty of more than $122 million."

Meanwhile, U.S attorney Damian Williams said McKinsey Africa participated in a years-long scheme to bribe SA government officials and unlawfully obtain a series of highly lucrative consulting engagements that netted McKinsey Africa and its parent entity McKinsey & Company approximately $85 million in profits.

“The scheme was carried out by a senior partner at McKinsey and allowed McKinsey Africa to repeatedly get awarded consulting contracts through corruption and bribes at two different state-owned entities in South Africa.

"This office and our law enforcement partners will continue our fight against American companies that seek to gain an unfair business advantage by supporting corrupt political officials overseas, no matter the industry, no matter the country, and no matter how prominent or profitable those companies may be," said Williams.

Chad Yarbrough, the assistant director of the FBI Criminal Investigative Division, said the settlement underscores the country's unwavering commitment to hold companies accountable that willfully engage in corrupt activities around the world.

sinenhlanhla.masilela@iol.co.za

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