MCKINSEY and Company Africa Ltd will pay over $122 million to resolve a US investigation into a bribery scheme linked to South Africa’s state-owned enterprises, Eskom and Transnet. The Justice Department announced the settlement on Thursday, highlighting McKinsey Africa’s role in conspiring to violate the Foreign Corrupt Practices Act by bribing South African officials in exchange for access to confidential information regarding consulting contracts.
Deferred prosecution agreement
McKinsey Africa has entered into a three-year deferred prosecution agreement with the US Department of Justice. The company was charged with conspiracy after it was revealed that it paid bribes to officials at Eskom, the state-owned energy giant, and Transnet, the state-run rail and port operator. In return, McKinsey gained access to non-public data that helped secure lucrative consulting contracts.
Nicole M. Argentieri, head of the Justice Department’s Criminal Division, condemned the actions, stating that the company earned tens of millions of dollars through the bribery scheme.
Financial fallout and accountability
The settlement includes a penalty paid to South Africa in addition to the $122.85 million. McKinsey cooperated with the investigation, implementing anti-corruption training for employees, which was considered during the proceedings. While McKinsey did not directly profit from the scheme, its subsidiary made approximately $85 million in profits.
One senior McKinsey executive, Vikas Sagar, who had worked on the case, previously pleaded guilty to conspiracy charges. McKinsey stated that Sagar concealed his actions from the company, and he was dismissed as soon as the company became aware of his misconduct.
Long-standing issues at Eskom and Transnet
The inefficiencies within Eskom and Transnet have long hampered economic growth in South Africa, contributing to the struggles of Africa’s most industrialised economy for over a decade. McKinsey’s involvement in this scheme added to the broader corruption concerns surrounding the companies.
In a related matter, McKinsey is also in negotiations with the Justice Department to settle a separate investigation concerning its role in the opioid crisis, with a potential $600 million settlement looming.
