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McKinsey & Co has agreed to pay more than $122 million (about R2.2 billion) to settle criminal allegations stemming from a corruption scandal involving former executives of South Africa’s ports and rail operator Transnet.
Federal prosecutors and defence lawyers said at a Thursday court hearing in New York that the US Justice Department agreed not to proceed with a case against the consulting firm if it engages in no further misconduct for three-and-a-half years.
Whether that means they are free to help screw over another country in three-and-a-half years is not clear, but some more jail time for perpetrators would have been nice though.
The deal settles the US inquiry as well as charges filed against McKinsey by the NPA. McKinsey said in a statement that it will continue to cooperate with US and South African authorities and “welcomes the resolution of these matters and the closure of this regretful situation.”
The “regretful situation” refers to the consulting firm’s role in Transnet’s purchase of 1,064 locomotives at a cost of R54 billion. McKinsey made $85 million (R1.5 billion) as part of the alleged bribery scheme.
“McKinsey will also pay an approximate amount of R1.1 billion into South Africa’s Criminal Assets Recovery Account, in recognition of the social and economic harm caused by the conduct of a former employee in South Africa.”
A former senior McKinsey partner, Vikas Sagar, previously pleaded guilty to conspiring to violate US foreign bribery laws and the firm repaid $63 million (R1.1 billion) in fees to Transnet in 2021.
The agreement also concludes US and South African probes into McKinsey’s work for another South African state-owned company, power giant Eskom Holdings.
“McKinsey has already made financial restitution to these entities by returning all fees paid to it, with interest.”
The deal also requires McKinsey to continue investing in its anti-corruption programs to avoid future misconduct. It must also meet additional anti-corruption standards; failure to do so permits the NPA to resume its investigation into the company’s operations in South Africa during the state capture period.
Advocate Ouma Rabaji-Rasethaba, the head of the Asset Forfeiture Unit and Deputy National Director of Public Prosecutions, said: “This resolution is yet another significant step that takes South Africa forward in fighting crime. The NPA remains committed not only to prosecuting criminals but also to contributing to the economic recovery of the country through restitution.
Justice is served, we guess.
