McKinsey Africa to pay $122m to resolve US probe into SA bribery scheme

Washington — McKinsey and Co Africa, a subsidiary of McKinsey & Co, has agreed to pay more than $122m to resolve a US investigation into a bribery scheme in SA, the justice department said on Thursday.

Privately owned McKinsey Africa was charged with one count of conspiracy to violate the Foreign Corrupt Practices Act for agreeing to pay bribes to officials at state-owned energy company Eskom and port and freight rail operator Transnet in exchange for nonpublic information about consulting contracts.

McKinsey Africa entered into a three-year deferred prosecution agreement with the justice department.

"McKinsey Africa bribed South African officials in order to obtain lucrative consulting business that generated tens of millions of dollars in profits," said Nicole M Argentieri, head of the department’s Criminal Division.

Vikas Sagar, a senior former partner at McKinsey, previously pleaded guilty to one count of conspiracy to violate the act. He could not immediately be reached for comment.

In a statement, McKinsey said Sagar had concealed his conduct from the company, and that it fired him soon after it learnt about the issues.

McKinsey and McKinsey Africa earned about $85m in profits through the bribery scheme, the department said. Eskom had hired McKinsey to help it execute a "turnaround plan".

Inefficiencies at Eskom and Transnet have constrained growth in SA’s economy for more than a decade.

The department said McKinsey Africa had received credit for co-operating with its investigation and conducting anticorruption training for employees.

The $122,850,000 McKinsey has agreed to fork up includes a penalty it will pay in SA.

McKinsey is also in talks with the department to pay more than $600m to resolve a separate investigation into the consulting firm’s work helping opioid manufacturers boost sales that allegedly contributed to a deadly addiction epidemic, people familiar with the matter say.

Reuters