Consultant McKinsey & Company have now taken some steps to repair their damaged reputation in South Africa after their global managing partner delivered an apology to South Africans.
But the apology, such as was articulated by Kevin Sneader at the University of Pretoria's Gordon Institute of Business Science on Monday morning, will not be sufficient if it is not accompanied by more information about what the firm found in its internal investigations.
Sneader, who took over McKinsey's top job at the beginning of the month, told the audience that the firm's governance processes failed and that the Johannesburg based McKinsey executives' "attitude was not right". It prevented the firm from "doing the right thing", he said.
McKinsey was contracted by Eskom to effect a turn-around strategy and had to include Trillian Capital Partners, the known Gupta front company, as empowerment partner. It was paid more than a billion rand for its troubles, while Trillian received around R600-million. But the relationship between McKinsey and Trillian soured very quickly, the firm says, because the latter was unable to provide details like shareholding registers. Their partnership was never formalised, McKinsey says.
But this wasn't the first time that McKinsey jumped into the tender bed with the Guptas. In 2013 Regiments, from which Trillian was spawned, was contracted by McKinsey as its supplier development partner for work it was doing with Transnet, among others. The Financial Mail reported that Salim Essa, known as "the fourth Gupta brother", scored around 30% of the fees Regiments earned from McKinsey and took all the business Regiments had with parastatals with him when Trillian was repurposed. McKinsey was then contracted by Eskom and the firm and Trillian received around R1,6-billion for work done for Eskom. Reuters earlier quoted two former McKinsey employees saying that the firm knew the risks associated with Regiments and Trillian but turned a blind eye.
Sneader told the GIBS audience that McKinsey has conducted a thorough internal investigation and that all the evidence obtained, including nine million emails, hundreds of thousands of documents including telephone logs and personal emails as well as eighty interviews, were scoured by two independent law firms, including Norton Rose Fulbright. "We found no evidence our firm engaged in corrupt activity. Let me repeat this as it is important: we found no evidence our firm engaged in corrupt activity," he said.
McKinsey has taken a battering in this country and the Eskom fallout has made waves in Europe as well, with The Economist saying Sneader — who took over the top job last week — has "repair work" to do.
He added that the inquiry made three clear findings: no money was paid to anyone to secure contracts, McKinsey did not authorise Eskom to pay Trillian and the firm did do actual work for Eskom.
In an interview after the speech Sneader told HuffPost that his company's apology is not because it was corrupt or contravened laws, but because it became embroiled in state capture and its repercussions. He explained that there was no feedback to McKinsey's partners from the Johannesburg office on state capture and that they weren't aware of the depth and impact of state capture on the country.
McKinsey has to lay bare the full nasty in its dealings with Trillian and Eskom. Otherwise state capture, that toxic stench of graft, dishonesty and theft, will continue to linger.
McKinsey has taken a battering in this country and the Eskom fallout has made waves in Europe as well, with The Economist saying Sneader — who took over the top job last week — has "repair work" to do. The firm has lost some top contracts in this country, including with Absa, Standard Bank and Coca-Cola and has had to send 60 staff overseas because local work isn't enough.
If McKinsey really wants to put this sorry mess behind it, it will have to be even more transparent than it has been up until now — and release the findings by Norton Rose Fulbright as well as the second law firm contracted to investigate the debacle.
Sneader and his team of sharp communicators have been at pains to explain the chain of events from contracting to apology. It has explained its position and the findings of its investigations. But it has to lay bare the full nasty in its dealings with Trillian and Eskom. Otherwise state capture, that toxic stench of graft, dishonesty and theft, will continue to linger. Sneader told the audience McKinsey wants to help South Africa fulfil its promise.
Helping us get to the bottom of state capture will go a long way to do that.