McKinsey's Global Boss Told: 'You Raped SA'

Bonang Mohale, CEO of Business Leadership SA, gave consulting firm McKinsey an earful after its boss apologised to the country for its dealings with Eskom.
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Arnd Wiegmann / Reuters

Consulting firm McKinsey needs to understand the "bone-deep anger" in South Africa about state capture and acknowledge that it "raped" the country of resources, Bonang Mohale, CEO of Business Leadership SA, said on Monday.

He told a chastened Kevin Sneader, global managing partner of the firm, that Africa and South Africa have been raided for years and that the firm, in "aiding and abetting" state capture, contributed to this. Sneader gave a speech at the University of Pretoria's Gordon Institute of Business Science in which he apologised to South Africa for the firm's role in state capture.

He said the company's internal investigations found no evidence that it engaged in corrupt activity during its dealings with parastatal Eskom and Gupta-linked Trillian Capital Partners. The firm did not authorise any payments to Trillian and that Eskom's payments to that company, who claimed around R600-million in fees, were made with the state-owned enterprise being aware of McKinsey's decision not to partner with Trillian. He officially apologised to South Africans and reiterated that the firm would by today have paid back the fees earned from Eskom.

Mohale, sitting next to Sneader, roasted Sneader and McKinsey, saying "at least we are getting an apology, better late than never". He told Sneader that he hopes the matter of interest repayments will be reconsidered, to which Sneader said the company would look into the matter. McKinsey has agreed to repay R902-million in fees, but has not indicated whether it will repay it with interest.

Mohale told Sneader that he is shocked that McKinsey purposefully decided to bill Eskom, a cash-strapped state-owned enterprise struggling to pay its debt, such a huge amount. He said McKinsey stole from South Africa.

"In a country where more people are on social grants than gainfully employed, 15-million people versus 17-million people, in a country where 5.9-million young people are unemployed, where unemployment is 35 percent, a company like McKinsey not only allowed it [earning huge fees] but aided and abetted it... in South Africa it is state capture."

He said Eskom's dire financial position is as a result of McKinsey's actions in South Africa. "Eskom, as a direct consequence of McKinsey, now has to borrow money, not to service capital debt but to repay interest. The legacy of this will be with us for 10 years, it will take five years just to fix it and five more to get where we were."

David Lewis, executive director of Corruption Watch, told Sneader in the packed auditorium that his organisation "is convinced that McKinsey paid a huge bribe to Eskom" in order to get the contract. Sneader dismissed this saying evidence considered by two law firms did not support allegations of corruption and bribery. He earlier told the audience that the internal investigation examined 9-million emails, hundreds of thousands of documents and conducted over 80 interviews.