JOHANNESBURG – GLOBAL management consulting firm McKinsey & Co, is embroiled in yet another controversy after a US bankruptcy judge decided to reopen a two-year case amid allegations of non-disclosure.
The New York Times this week reported that the US Bankruptcy Court had moved to reopen the case of coal-mining company Alpha Natural Resources’ amid allegations that the firm hid investments that gave it a financial stake in the outcome of the case.
Judge Kevin R Huennekens reportedly said the allegations were among the most serious he had ever seen.
New York-headquartered McKinsey, whose clients include sovereign wealth funds worth more than a trillion dollars was alleged to have been associated with South Africa's state capture.
However, a McKinsey spokesperson said that there was no evidence the company was involved in state capture.
“To date, our extensive investigation has found no evidence our firm was engaged in acts of corruption to secure business from State Owned Entities,” she said.
The Judicial Commission of Inquiry led by Judge Raymond Zondo to investigate allegations of state capture is still underway and resumes tomorrow (Wednesday).
McKinsey made sweeping changes to its South Africa business to try to rebuild its reputation after amid allegation scandals that resulted in taxpayers losing billions of rand to looting from state companies during Jacob Zuma's nine-year tenure as president.
It also voluntarily repaid Eskom R99.5 million following a joint decision between McKinsey, Eskom and the Asset Forfeiture Unit.
Kevin Sneader, global managing partner of McKinsey conceded in July last year that the company’s governance processes failed, its commercial approach led to a fee that was too large, and it did not admit where it went wrong.
“And worse, we did not say sorry quickly enough and clearly enough,” he said.
Sneader also said the problem began when the 92-year-old company started working with Gupta-linked firm, Regiments.
“We did a quick, but insufficiently robust, due diligence. It was inadequate,” he said. He also acknowledged problems with Trillian, saying while the company conducted a robust due diligence, it should have been done earlier.
“ Some of our people had raised concerns about Trillian. The due diligence should have been completed before any work started,” he said.
He also said the attitude within our team was not right.
They were not attentive enough to the fact that Trillian was a new entity or to the scale of the challenges facing Eskom, and that it should have questioned Trillian with greater scepticism and greater urgency.
“Crucial administrative steps for our work at Eskom were also not followed correctly and our record keeping was inadequate. There were additional errors of process that impacted our ability to make the right judgements at the right time,” he said.