Sneader’s apology is an orchestrated move to rebuild relations and salvage reputation following McKinsey’s association with companies linked to the Gupta family.
It came days after the company announced that it would repay approximately R900million that Eskom has been demanding from the firm since last year.
Eskom had paid McKinsey and Gupta family-owned consultancy Trillian R1.6billion for advising the power utility on a turnaround programme in 2016. Eskom last year demanded that the companies repay the money as it alleged that the contracts were unlawful.
Speaking at a seminar in Johannesburg yesterday, Sneader said the global consultancy regretted that it had anything to do with state capture, which entailed deliberate weakening of governance at key state-owned companies in order to facilitate blatant looting by a politically-connected elite. “State capture has had a horrible effect on South Africa, its economy and its people,” he said.
In a frank admission, he said the firm’s fee to Eskom was “too large.” He said McKinsey’s governance processes also failed. “We did not admit where we were wrong. And worse, we did not say sorry quickly enough and clearly enough,” said Sneader.
He said the company committed mistakes when it forged business relationships with local companies Trillian and Regiments Capital, saying its due diligence on the Regiments was superficial. On the other hand, he said due diligence on Trillian was robust, but was not done early enough.
“Some of our people had raised concerns about Trillian. The due diligence should have been completed before any work started.
"We were so focused on delivering our work that we did not focus enough on the broader risks. That was wrong. We deeply regret that mistake,” said Sneader.
He was, however, adamant that the company did not engage in any corrupt activity.
McKinsey did not pay any bribe - direct or indirect - to secure Eskom work, he said.
Eskom yesterday said that apparent lapses in its own governance processes and improprieties around its procurement process led to a loss of trust in Eskom and its processes.
Eskom said that its board and management would deal decisively with improper and irregular contracts.
As a result, it would pursue the recovery of approximately R600m from Trillian, which has not made any arrangements to repay, through the legal review process together with the National Directorate of Public Prosecutions.
“We would like to thank the Asset Forfeiture Unit, the National Director of Public Prosecutions and McKinsey for their co-operation and confirm that we have received the payment of R902m.
"This payment goes a long way towards our quest to address the issues of funds lost and regaining the trust of our people,” said chief executive Phakamani Hadebe.
Hadebe said that Eskom was committed to root out financial mismanagement and malfeasance, and would collaborate with the National Treasury, the Special Investigative Unit, the SAPS, the Hawks, the National Director of Public Prosecutions and the Zondo Commission to fight corruption.
- BUSINESS REPORT