McKinsey targeted in action over Eskom contracts - TechCentral

McKinsey targeted in action over Eskom contracts

Public enterprises minister Lynne Brown has instructed Eskom to begin legal action against companies including McKinsey & Co over their involvement in disputed contracts at the state-owned electricity company.

Brown ordered Eskom to start taking legal steps against consultancy firms McKinsey and Trillian Capital Partners, as well as suspended acting CEO Matshela Koko and chief financial officer Anoj Singh, who is on special leave, her spokesman, Colin Cruywagen, said by phone Thursday. Three other senior managers may also face misconduct charges, Business Day reported Friday, without citing its sources.

McKinsey in July said it’s reviewing documents related to work done for Eskom. An interim report by Eskom and G9 Forensic found McKinsey and Trillian, a company linked to the politically connected Gupta family, made R1.6bn in fees and expected to make another R7.8bn, according to amaBhungane and Scorpio, two investigative journalism groups. The US firm hasn’t engaged in corruption or paid bribes, it said in an e-mailed response to questions.

Questionable deals

Singh was placed on leave in July after he was linked to a series of questionable deals involving the Gupta family, who are friends with President Jacob Zuma. Koko was suspended pending an investigation into contracts awarded to a company where his stepdaughter was a director. He had denied wrongdoing.

Eskom is spending tens of billions of dollars on new power plants that are years behind schedule and is at the centre of allegations that the Guptas, who are in business with Zuma’s son, used their relationship with the president to win state business. The company disclosed R3bn of irregular expenditure in its financial results on 20 July, a figure which its auditors said they couldn’t independently confirm. Zuma and the Guptas have denied wrongdoing.

The Democratic Alliance has already filed charges of fraud, racketeering and collusion against McKinsey and said it plans to approach the US department of justice about the work the consultancy did for Eskom.  — Reported by Paul Vecchiatto, (c) 2017 Bloomberg LP

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