McKinsey finds ‘violations of professional standards’ but no bribery at SA arm
Global management consultancy McKinsey has released the conclusions of its internal investigation into allegations of wrongdoing in the South African arm of its business.
Questions were first raised following a report by advocate Geoff Budlender into allegations of ‘state capture’ by Gupta-owned company Trillian Capital Partners. The Guptas – who are close to the family of President Jacob Zuma – are being investigated for alleged siphoning of state funds to their private companies. The report triggered concerns that McKinsey had ‘knowingly’ channelled funds from state-owned utility Eskom to Trillian Capital Partners in order to secure a $78m contact with Eskom.
McKinsey reports that its four-month long investigation into the allegations have found ‘some violations of professional standards’ but no evidence of bribery or corruption (17 October).
‘The behaviours of some individuals fell short of our standards. Some of our processes were inadequate and we have acted to reinforce compliance and improve them,’ Tom Barkin, McKinsey’s Global Chief Risk Officer, said in a statement.
‘We are embarrassed by these failings and we apologise to the people of South Africa.’
The firm denies acting for the Gupta family or any companies publicly linked to the Guptas and has stated that it did not have a contractual relationship with Trillion.
South Africa’s largest opposition party, the Democratic Alliance (‘DA’), has filed charges of fraud, racketeering and collusion against McKinsey under the Prevention and Combating of Corrupt Activities Act, and has also confirmed that it is reporting McKinsey to the US Securities and Exchange Commission (‘SEC’).
‘The DA will not back down in our pursuit of full accountability in these matters‚’ DA leader Mmusi Maimane told reporters at a media briefing in September. ‘As was evident in the Bell Pottinger case‚ those in the private sector who are caught in dodgy dealings with the powerful and the corrupt will be brought to book and face full accountability.’
McKinsey is not the only household name which has been linked to poor professional standards in South Africa. PR firm Bell Pottinger went into administration in September in the fallout from its divisive ‘white monopoly capital’ campaign for the Guptas. The Guptas are also long-standing clients of auditors KMPG. An internal review into KMPG South Africa’s conduct in relation to its controversial client found evidence of impropriety and resulted in the resignation of the top management in September.
‘While the investigation did not identify any evidence of illegal behaviour or corruption by KPMG partners or staff, this investigation did find work that fell considerably short of KPMG’s standards,’ said KPMG International.
