McKinsey will repay the ‘tainted’ R1bn Eskom is demanding
The money was paid for McKinsey’s work on an Eskom turnaround plan, but the Treasury did not approve of the contract
Global consultancy firm McKinsey has set aside the R1bn Eskom has demanded it repay, and is keen to pay back the money, McKinsey global leader for the public and social sector practice David Fine said on Wednesday.
Fine was giving evidence before the inquiry into state capture being held by Parliament’s public enterprises committee. The money was paid for McKinsey’s work on a turnaround plan, but the Treasury did not approve of the contract.
“McKinsey does not want any tainted money. We went into a relationship with Eskom in good faith,” Fine said. Eskom had given verbal confirmation that the contract had all the requisite approvals.
Fine said even if the court decided that the contract was valid McKinsey would still give the money back to SA, not because the firm felt guilty but because the contract did not have the required Treasury approvals.
Asked by evidence leader Ntuthuzelo Vanara why McKinsey did not simply go ahead with the repayment regardless of the outcome of the court case, Fine said McKinsey did not want to pay the money twice. It needed to know whether the money should be paid back to Eskom or the fiscus.
Fine said the question had been discussed within McKinsey globally and there was agreement that the money should be paid back.
In addition to the R1bn demanded from McKinsey, Eskom is also demanding the repayment of R564m from Trillian Capital, which worked alongside McKinsey before discussions about them becoming a supplier development partner were terminated in March 2016.
Fine said McKinsey ended is relationship with Trillian early in 2016 because of concerns over its ownership structure.
McKinsey was under the impression that Trillian, headed up by Eric Wood, would be a black-empowered consultancy firm, but this was not the case. Fine said he also became concerned because some of the people involved in Trillian were potentially politically exposed individuals or were not of the stature to build up a solid consultancy firm.