NICOLE FRITZ: No surprise blue-chip villains play good guys in McKinsey’s fictions

If one were casting a show on state capture, here would be the dramatis personae:

• Some pliant, venal stooges to take the helm of the relevant state-owned entity;
• Salivating predators at the door, aka close Gupta associates, scheming as to how to pervert procurement processes so they yield the greatest enrichment to themselves and their bosses;
• A flamboyant, or at least flamboyantly ill-qualified, cabinet member, or similarly influential head honcho, to facilitate the plunder (take your pick from Malusi Gigaba, Des van Rooyen and Tom Moyane);
• Beleaguered officials and employees who engage in resistance and are sidelined and pilloried; and
• At least one blue-chip, august multinational corporation willing to provide a veneer of legitimacy to the whole sordid mess.

In volume one of the judicial commission of inquiry into state capture the latter role was played by Boston-headquartered Bain & Co, eager to take whatever pickings it could from restructuring the SA Revenue Service and relieve it of its reputation as one of the leading revenue collection agencies in the world.

In volume two, McKinsey dons those robes. And given that acting chief justice Raymond Zondo appears to be leaving the Eskom saga to the report’s final instalment, you can bet the urbane, smooth-talking, terrifyingly amoral McKinsey villains will be making a return in volume three.

But it is McKinsey’s nefarious involvement in transactions at Transnet, stated in the report to be “the primary site of state capture in financial terms” that are documented in volume two.

Describing a money-laundering arrangement, the report documents how in October 2012 McKinsey agreed to appoint Regiments as its supplier development partner subject to Regiments agreeing to share with Salim Essa 30% (later increased to 50%) and Kuben Moodley 5% of all income received from Transnet. “It is not disputed that neither Mr Essa nor Mr Moodley (or any of their companies) rendered services of any kind to McKinsey or Transnet beyond the introduction of Regiments to McKinsey.”

The report also explains that “during 2014-2015, McKinsey and Regiments were awarded contracts valued at R2.2bn by way of confinement [an abuse of normal procurement processes] rather than by open public tender ... The evidence established that McKinsey and Regiments were irregularly in possession of [Transnet’s] confinement memoranda before making the bids on their contracts ... These contracts all appointed Homix and Albatime (Gupta-linked laundry vehicles) as supplier development partners.

“Fee payments (in an unknown amount) were irregularly made to McKinsey and Regiments in July 2014 in terms of these contracts before the conclusion of the tender process. Correspondence of June 15 2014 confirms that provision for fee payments to Homix and Albatime in excess of R100m were to be made in terms of these contracts. Mr Fine of McKinsey confirmed in a statement to parliament that neither Homix nor Albatime were involved in providing any services on any project in which McKinsey was involved.”

You’d never know any of this by looking at McKinsey’s website. Instead, where mention is made of its dealings in SA you have selectively edited videos of proceedings before the state capture commission in which it receives acclaim for its ostensibly responsible corporate citizenship. It’s true: McKinsey has agreed to repay much of its fees in relation to state capture contracts, but those amounts are not equal to the damage done.

Some will say, and they will be correct, that the liability of corporate actors such as McKinsey must be second to that of our elected officials and those they appointed to serve in state-owned enterprises. Their duties to act in service of the SA people, to treat sacredly their fiduciary responsibilities to the public, are far larger than any owed by the likes of McKinsey.

Still, there is something supremely distasteful, not to say criminal, about global corporations that, far from enhancing our state’s capacity, stripped it of its resources and reputation.

• Fritz, a public interest lawyer, is director of the Helen Suzman Foundation.