McKinsey to repay R650m to the state
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JOHANNESBURG - GLOBAL management consultancy McKinsey said yesterday that it would pay back R650 million it earned for controversial work it performed at state-owned enterprises (SOEs) alongside Regiments Capital.
McKinsey said it would repay the entirety of the fees earned on projects for Transnet and national carrier SA Airways (SAA) as the money was brought into disrepute by the involvement of Regiments Capital.
McKinsey's chief risk officer Jean-Christophe Mieszala said they had co-operated extensively with Deputy Chief Justice Raymond Zondo's
Commission of Inquiry into State Capture since 2018.
Mieszala said the firm would repayy the money despite it or current employees and partners not being directly implicated.
“We hold ourselves to the highest professional standards, and we have no wish to benefit from potentially tainted contracts. We regret our errors of judgement and even the possibility that we were used to further others' improper actions,” Mieszala said.
The decision comes on the eve of witnesses from McKinsey testifying at the inquiry and being questioned by evidence leaders about the group's role into allegations of state capture.
The commission shared with
McKinsey significant documents and information that indicated irregularities regarding Regiments' role in several projects worked jointly between 2012 and 2016.
This evidence suggested irregularities in the contracts of McKinsey alongside Regiments at Transnet and SAA, but did not implicate any current McKinsey employees or partners in any corruption or impropriety in relation to these contracts.
Regiments, which is currently being liquidated, was at the centre of corruption and capturing SOEs through its director and Gupta-family associate, Eric Wood.
McKinsey worked with Regiments on nine contracts at Transnet and on the one contract at SAA.
Last month, McKinsey informed the commission that it was voluntarily committing to return all of the fees it had earned on these contracts.
The firm said it was taking this step although it stands by the value of the extensive work it delivered for its SOE clients.
McKinsey said it was now engaging with SOEs and the relevant authorities to conclude the repayment through an appropriate and expeditious process that ensures the funds were repaid lawfully and with finality.
The commission commended McKinsey for taking the step to repay the money, saying it was important for all companies to assist in the fight against corruption in this country. This is not the first time that McKinsey is repaying monies it had earned for work at SOEs.
In 2018, it repaid the fees that it had earned on its Top Engineers MSA contract with Eskom for work on an Eskom project on which another Gupta-linked company, Trillian Capital, had also invoiced the power uitility.
“We stand by the value of our work. However, in line with our determination to do what's right and be guided by our firm's earlier commitments to Eskom, we will return fees for projects that – even indirectly – may have been related to state capture.” Mieszala said.
“That is not something our firm is willing to accept.