Sikonathi Mantshantsha Deputy editor: Financial Mail
Eskom CEO Phakamani Hadebe. Picture: FREDDY MAVUNDA
Eskom CEO Phakamani Hadebe. Picture: FREDDY MAVUNDA

Electricity producer Eskom tied itself in knots on Monday night, backtracking on claims it made in a media briefing that morning that it had laid criminal charges of fraud, theft, corruption and a conspiracy to commit fraud against global consultancy McKinsey & Co.

This was in relation to a payment of more than R1.6bn made to the consultancy and its former empowerment partner, Trillian, in 2016 by Eskom former executives, some of whom were fired earlier in 2018.

The McKinsey contract was not valid, as it was not approved by Treasury. No contract was in place between Eskom and the Gupta-linked Trillian.

McKinsey is one of a number of multinational firms including audit firm KPMG and software giant SAP, whose reputations have been battered after being embroiled in state-capture scandals involving the Guptas.

Eskom CEO Phakamani Hadebe told the morning briefing that since January, the power utility had laid 11 criminal charges against stakeholders, including nine senior executives, implicated in corruption.

However, on Monday night Hadebe told Business Day he had made a mistake in the earlier statement, which was broadcast live by various media outlets, in that no charges had been laid against McKinsey.

Hadebe said Eskom had only entered into a civil settlement for McKinsey to pay back its portion of the R1.6bn. "The matter of criminal charges is left with the police to act on," said Hadebe.

The Prevention and Combating of Corrupt Practices Act of 2004 places an obligation on people in a position of authority to report any suspicions of criminal wrongdoing to the police.

McKinsey repaid its R902m earlier in July, but denied any criminal wrongdoing. Its new global head, Kevin Sneader, apologised earlier in July for McKinsey having had "anything to do with any of the issues surrounding state capture" and its "horrible effect on SA, its economy and its people".

Sneader also admitted that the firm had overcharged Eskom at a time when the power utility "was on a financial cliff edge".

McKinsey and Trillian originally stood to earn R9.4bn from the controversial three-year advisory contract.

In September 2017, civil society organisation Corruption Watch laid corruption and fraud charges against McKinsey with the US Department of Justice. In terms of the Foreign Corrupt Practices Act of 1977, the US government can prosecute anyone anywhere in the world for crimes involving state institutions and influential politicians.

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