McKinsey feels heat on Guptas as US Justice Department is approached
On Monday Corruption Watch announced that it would approach the US Justice Department with information allegedly linking McKinsey to corruption and bribery allegations involving Eskom
International consultancy firm McKinsey‚ which has been dragged into the Gupta state capture saga ‚ has distanced itself from its South African director‚ Vikas Sagar‚ and the Gupta-linked company‚ Trillian.
On Monday Corruption Watch announced that it would approach the US Justice Department with information allegedly linking McKinsey to corruption and bribery allegations involving Eskom.
In June Eskom said that New York City-based law firm Oliver Wyman found payments totalling R1.6-billion to Trillian and McKinsey to be above board. But two weeks ago Eskom admitted to lying about payments made to Trillian and McKinsey and said that the payments were red-flagged and that a legal review was recommended.
McKinsey on Tuesday vehemently objected to Corruption Watch's accusations.
The firm's global spokesman‚ Steve John‚ said: “McKinsey has never served the Gupta family or any companies known to be linked to the Guptas.
“We have not made payments to the Guptas or any company publicly linked to them. We have categorically not paid bribes in exchange for contracts. We have secured all our work for State Owned Companies on the basis of our demonstrable impact for our clients.”
He added that they had been advised by their lawyers that there was no basis for Corruption Watch's complaint to the US Justice Department.
McKinsey’s South African office has been under fire for its links to Trillian‚ which until recently was owned by Gupta ally Salim Essa.
Trillian reportedly received irregular payments from Eskom of at least R495-million‚ of which some went towards the acquisition of the Optimum Coal Mine by the Gupta- and Duduzane Zuma-owned Tegeta.
McKinsey's SA director‚ Vikas Sagar‚ who is currently on a leave of absence‚ wrote to Eskom in February 2016 and asked that payments be made directly to Trillian‚ the company's proposed BEE supplier at the time.
McKinsey International has since distanced itself from any relationship with Trillian.
The firm's South African office came under fire in a damning report authored by Advocate Geoff Budlender - who was hired by Trillian's former chairman Tokyo Sexwale – for obstructing him in his inquiry.
Budlender was tasked to look into allegations of irregularities pertaining to Trillian.
John‚ in response to Budlenders' assertions of obstruction‚ implicated Trillian and Sagar.
In response to questions from TimesLIVE‚ he said: “We issued a short statement to Budlender in March 2017.
“In May we became aware of a letter written by one of our Partners [Sagar] to Eskom which contradicted our earlier statement.
“We initiated an internal investigation‚ supported by an external law firm.
“In light of our decision to launch our own investigation‚ we thought it would have been premature for us to answer Budlender’s questions‚ while we were ourselves gathering facts.”
He said McKinsey had never claimed that they did not have a relationship with Trillian.
“We’ve been clear and open that we considered forming a Supplier Development Partnership with Trillian. Between 2015 and 2016 we explored what this partnership could look like‚ including understanding Trillian’s capabilities through McKinsey and Trillian carrying out initial work at Eskom.
“Our firm’s global risk committee‚ working closely with leaders of our Johannesburg office‚ conducted a due diligence review of Trillian and its ownership and credentials.”
He said they ultimately did not partner with Trillian because it had‚ among other things‚ failed to “provide information about who their shareholders were”.
“We terminated partnership discussions with Trillian in March 2016 and informed Eskom and Trillian in writing of this decision.”
He said Sagar's letter‚ which McKinsey International management had been surprised by‚ inaccurately characterised McKinsey’s relationship to Trillian and the firm's work with Eskom.
“No subcontractor relationship existed between McKinsey and Trillian.”
He added that the letter was prepared at Trillian and Eskom’s request and that the letter “did not‚ of itself‚ permit payment to Trillian”.
He said their internal investigation was continuing.