McKinsey to Repay $63 Million to South Africa’s Transnet
McKinsey to Repay $63 Million to South Africa’s Transnet
(Bloomberg) -- McKinsey & Co. will repay 870 million rand ($63 million) in fees to South African state logistics company Transnet SOC Ltd., seeking to distance itself from contracts linked to corruption allegations.
The payment represents a final settlement, the companies said in a joint statement Tuesday. McKinsey had agreed to pay 650 million rand in December, a deal that also related to work with South African Airways, but Transnet argued the amount should be higher.
The contracts were carried out with Regiments Capital, a company closely associated with the Guptas, a family at the center of widespread corruption that took place during the presidency of Jacob Zuma. They deny wrongdoing.
McKinsey is one of a number of international firms caught up in South African corruption investigations related to business with state entities. SAP SE, the German software company, auditor KPMG LLP and Swiss industrial group ABB Ltd. are three others.
‘Errors of Judgement’
The Transnet settlement follows a McKinsey payment of almost 1 billion rand to state power utility Eskom Holdings SOC Ltd. in 2018. That was for work alongside Trillian Capital Partners Pty Ltd., another business linked to the Gupta family. McKinsey says there’s no evidence implicating company employees in wrongdoing, though outgoing Global Managing Partner Kevin Sneader said in December “errors of judgement” had been made.
After replacing Zuma in 2018, President Cyril Ramaphosa started an inquiry into so-called state capture, the local term for corruption between private parties and government-owned entities. The practice is seen as a major cause of the financial collapse of state companies, particularly Eskom, a major barrier to economic recovery.
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