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McKinsey has agreed to pay $122 million to authorities in the US and South Africa over its role in a massive corruption scandal during the administration of former South African President Jacob Zuma.
The consulting group paid bribes to secure millions of dollars in consulting work from South African state-owned companies between 2012 and 2016, according to a deferred prosecution agreement announced Thursday by the U.S. Department of Justice and a statement from South Africa’s National Prosecuting Authority .
One of McKinsey’s former senior partners in Johannesburg, Vikas Sagar, has also pleaded guilty to participating in a conspiracy to violate the U.S. Foreign Corrupt Practices Act, U.S. prosecutors said Thursday. The plea was filed in a New York court in 2022 but was sealed while the investigation continued.
“McKinsey Africa participated in a years-long scheme to bribe government officials in South Africa and unlawfully obtained a series of highly lucrative consulting assignments that generated approximately $85 million in profits for McKinsey Africa and its parent company McKinsey & Company,” said Damian Williams, the American lawyer. for the Southern District of New York.
McKinsey and Sagar bribed officials from Transnet, the South African rail freight monopoly, and energy company Eskom for information that helped win consulting work, U.S. prosecutors say, by knowingly allowing local partner companies channeled money to officials of the two state-owned companies.
The company received leniency from U.S. prosecutors in part because it cooperated with the investigation, the Justice Department said.
In a statement, McKinsey said it conducted its own extensive investigation into “the corrupt conduct of a former partner, Vikas Sagar, who concealed his unlawful conduct from the firm and his colleagues and then attempted to cover up his conduct. McKinsey terminated his employment more than seven years ago.”
The company said it was pleased to conclude the investigations and that it was committed to “regaining the trust” of the people of South Africa. The $122 million will be split 50-50 between U.S. authorities and South Africa’s criminal asset recovery account, which funds law enforcement efforts.
South African prosecutors have spent years investigating the systematic theft of government contracts, known locally as “state capture”, during Zuma’s presidency, which ended in 2018.
Two years ago, an official commission of inquiry concluded that the Gupta brothers’ business dynasty had used influence over Zuma to run a “racketeering enterprise” at Transnet by receiving contracts that favored their interests or those of employees. The Guptas and Zuma denied any wrongdoing.
Additional reporting by Rob Rose in Johannesburg