Deputy Chief Justice Raymond Zondo. Picture: Nhlanhla Phillips/African News Agency (ANA) Archives
Deputy Chief Justice Raymond Zondo. Picture: Nhlanhla Phillips/African News Agency (ANA) Archives

State Capture: Zondo praises McKinsey for paying back the money

By Kailene Pillay Time of article published May 26, 2021

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Johannesburg - State capture commission chairperson Deputy Chief Justice Raymond Zondo has welcomed McKinsey’s decision to pay back Transnet.

Speaking during the commission’s proceedings today, Zondo noted that it was not part of the commission’s mandate to recover these amounts.

“I think when some people criticise this commission for the costs that have incurred through its work, they remember at least here is this one occasion where, as a result of discussions between a unit of the commission and McKinsey, a substantial amount of money has been or will be repaid.”

It might be a small percentage of the amount, but it was something, Zondo said.

In joint statement released yesterday, McKinsey & Company agreed to pay back about R870 million by the end of the week for the work it performed on Transnet and SAA contracts tainted by state capture.

The management consulting firm and Transnet announced a final settlement agreement on the fees to be returned to the parastatal.

The statement read that the R870m included fees paid to McKinsey for projects undertaken with Regiments Capital, plus interest.

McKinsey worked alongside Gupta-linked Regiments Capital on a number of contracts that have since been investigated by the commission of inquiry into state capture.

In the course of its engagements with McKinsey, the commission showed the company certain evidence relevant to its contracts at Transnet and SAA.

The evidence suggested irregularities in the contracts, but it did not implicate any current employees or partners of McKinsey in any corruption or impropriety in relation to these contracts.

At the end of last year, the consulting firm made a commitment to the Zondo Commission to repay all the money it had received from state-owned enterprises (SOEs). McKinsey did not work alongside either Regiments or Trillian at any SOE other than Eskom, Transnet and SAA.

The agreement was brought to the attention of Justice Zondo by evidence leader Advocate Matthew Chaskalson today, shortly after the tea adjournment.

Chaskalson said the commission’s secretary received a letter from McKinsey’s legal representatives, Norton Rose Fulbright, on Monday.

Chaskalson read the letter to the commission that stated McKinsey had already repaid the full amount of fees it earned from Eskom when it worked alongside Trillian on a number of contracts deemed irregular and tainted by state capture.

In 2018, McKinsey repaid the full amount of the fees that it had earned on its Top Engineers MSA contract with Eskom, for work on an Eskom project on which Gupta-linked Trillian had also invoiced Eskom.

Chaskalson commended McKinsey for their agreement, saying “that is what a responsible corporate citizen should do”.

He did, however, highlight that this amount was below 3% of the total amount squandered in irregular contracts tainted by state capture.

He said the total amount squandered included some Gupta enterprises from “which we can’t expect voluntary repayment”, but they did include a number of South African and multinational companies that were responsible for vast sums of money on contracts linked to state capture.

“McKinsey has shown what a responsible corporate citizen does in these circumstances, and I am looking forward to seeing what those other companies do,” Chaskalson said.

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Political Bureau

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