Global consulting firm McKinsey & Company's managing partner will on Monday apologise to South Africa for the manner in which it handled its dealings with embattled and corrupted parastatal Eskom.
Kevin Sneader will address a breakfast gathering at the University of Pretoria's Gordon Institute of Business in Illovo, Johannesburg. According to the company, that has been in the crossfire since it emerged it received almost a billion rand in fees as part of a mooted turnaround strategy at Eskom, the firm's handling of the matter has exposed a number of failures in protocol and internal systems.
McKinsey, along with Gupta-linked Trillian Capital Partners as black empowerment component to the deal, was contracted by Eskom to effect a turnaround strategy. McKinsey received around a billion rand for its efforts while Trillian pocketed almost R600-million. Eskom, however, has remained in dire financial straits and was in February considered by economists to be a material risk to the economy. While Trillian has opposed any and all efforts by Eskom to recoup the money, McKinsey reached an agreement with Eskom and the Asset Forfeiture Unit on Friday to repay the fees it earned. Company executives earlier explained to HuffPost that the fee would be repaid by the 1,500 global partners who have each contributed a portion to a fund.
Representatives from McKinsey on Sunday said Sneader was visiting Johannesburg "to apologise and talk frankly and publicly" and to answer questions about what went wrong. He will also take "full responsibility" for events on behalf of the firm and will tell assembled business and civic leaders: "On behalf of McKinsey & Company I sincerely apologise to the people of South Africa. We are deeply sorry. I can tell you that the money will be in Eskom's account today. As a firm we have met our commitment voluntarily. It was the right thing to do."
McKinsey has consistently denied wrongdoing and explained that the contract entered into with Eskom was above board. The company insists that Eskom deviated from National Treasury prescripts and that it could not be held liable for Eskom's transgressions. It has also said it severed ties with Trillian as possible empowerment partner after the Gupta-aligned firm was unable to provide McKinsey with information such as shareholding.
Sneader will tell the gathering on Monday that McKinsey failed on three fronts: its governance processes were not up to scratch, it claimed a fee "that was too large" and it mismanaged the public fallout over the matter. He will criticise the local McKinsey's team's attitude "which was not right" and explain that errors of judgement were made. McKinsey should also not have demanded the large fee that it did and that it should have been structured to align better with the situation Eskom found itself in: "This should not have happened."
The firm also failed to publicly admit "it was wrong" and Sneader, a Scotsman who was appointed into the top job in February and is in his first month after taking over from his predecessor, will say: "We did not communicate well enough how seriously we were taking this, or how sorry we were for our involvement. To be brutally honest, we were too distant to understand the growing anger in South Africa."
McKinsey's Johannesburg-based partners earlier explained to HuffPost what measures they implemented to prevent a repeat of the Eskom debacle, which has cost them lucrative consultancy deals in the country. This includes not being dictated to by the client who it must use as empowerment partner, tightened due diligence and risk analysis procedures as well as an approach that treats the country as the client when dealing with public institutions.
Sneader will not be meeting any government officials or minister of public enterprises Pravin Gordhan while in the country, a McKinsey spokesperson said.