JOHANNESBURG - The head of global consultancy firm McKinsey on Monday apologised for overcharging Eskom as it repaid nearly R1 billion on a deal linked to the state capture scandal, the Financial Times reported.
McKinsey's global managing partner Kevin Sneader told the Gibs business school in Johannesburg: “The fee was weighted towards recovering our investment rather than being in line with Eskom’s situation... in that context the fee was too large . . . This should not have happened.”
He repeated that McKinsey extended its "sincere apologies" over the debacle that saw it charge the debt-ridden power utility for advisory services rendered in 2015 and 2016 in the absence of a valid contract.
McKinsey repaid the money after reaching an according with investigators on Monday.
McKinsey has stressed that the repayment is not an admission of guilt in any way.
According to the Financial Times, Sneader added that McKinsey had failed to fully grasp the extent of public anger in South Africa over its entanglement in the state capture scandal which saw companies linked to the Gupta family siphon billions of rands off the balance sheets of state-owned companies.
“To be brutally honest, we were too distant to understand the growing anger in South Africa,” Sneader was quoted as saying.
McKinsey's local partner Trillian Capital Partners, part of a host of companies linked to the controversial family, pocketed more than half a billion rand on the deal. McKinsey on Friday made plain that it would not be refunding the money it instructed Eskom to pay over to Trillian.
The payment caused an outcry last year after Eskom was forced to admit that it had lied about receiving the all clear from global consultancy Oliver Wyman over payments to the company. It was compounded when a former Trillian employee told the parliamentary inquiry into Eskom she did not believe the advice the company gave the power utility was worth R600 million.
The power utility meanwhile, in a statement said it welcomed the apology made by McKinsey.
"The apparent lapses in our own governance processes coupled with improprieties around - and mismanagement of – our procurement process led to a loss of trust in Eskom, its processes and its people.
"We have vast learnings to be taken out of this as we investigate what went wrong and as part of the recovery process. Whilst we are still in the process of strengthening our governance control systems, we continue to review our greater internal control environment to ensure that our key controls are not only adequately designed but are also effective".
This comes days after Eskom signalled that it would persist with efforts to recuperate the money.
McKinsey has not paid back the interest it earned on its fee of R902 million while legal wrangling over the refund dragged on.