US firm Oliver Wyman lays bare the details of Eskom’s ‘unusual’ deal with McKinsey
Uncapped incentive fees and clauses on deteriorating power plant performance tilted the contract heavily in McKinsey’s favour — but Eskom ignored the warnings
A US risk management firm advised Eskom last year to withhold tens of millions of dollars in payments for advice from McKinsey, because the global consultancy’s "very unusual" payment model allowed it to charge fees in excess of market rates. Despite the warning by US management consultancy Oliver Wyman, Eskom continued to make payments to McKinsey, two sources with direct knowledge of the matter told Reuters. Privately held McKinsey, the world’s largest management consultancy, is being probed by Parliament for fraud over a $130m contract to advise energy utility Eskom from late-2015 until July 2016. A third of the fees were paid by Eskom to Trillian, controlled at the time by members of the Gupta family, the billionaire friends of President Jacob Zuma implicated in state capture allegations. Eskom says it paid the fees to Trillian at McKinsey’s request, but McKinsey says it only worked alongside Trillian and they never had a subcontractor relationship. Trillian, a junior local mana...
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