Consulting firm McKinsey will no longer provide project management services to lobby group Business for SA (B4SA) after being charged with tender fraud at state-owned rail operator Transnet.
“As a consequence of being charged by the NPA [National Prosecuting Authority], McKinsey has withdrawn from providing project management and all other forms of support to B4SA’s current initiative,” B4SA chair Martin Kingston confirmed to Business Day.
B4SA, formed after the Covid-19 outbreak to assist the government with policy responses, says the McKinsey project management services included support to the government and other stakeholders on five key interventions: energy, logistics, crime and corruption, water and infrastructure.
McKinsey’s withdrawal from B4SA paves the way for the consulting firm to withdraw its services from government departments and state-owned entities. The state capture report says McKinsey was paid just under R1.9bn in connection with contracts shared with Regiments or Trillian at Eskom, Transnet and SAA.
“B4SA agrees with this course of action and has accepted the withdrawal of McKinsey from any involvement in the initiative,” Kingston said.
“McKinsey wishes in no way to compromise the important work and key public-private interventions of B4SA to support SA’s economic growth, as one of the requirements of our work would require productive engagement with relevant public sector entities,” the company said in emailed responses.
“McKinsey has proactively taken this step to ensure we can perform our work with B4SA with greater efficacy.”
It is unclear whether McKinsey is still providing services to Transnet.
In September, the NPA charged former McKinsey director Vikas Sagar and McKinsey with fraud, theft and corruption related to state capture at Transnet.
Sagar and McKinsey were added to the NPA’s state-capture case against other former Transnet officials, including former CEOs Brian Molefe and Siyabonga Gama, former Transnet CFO Anoj Singh and Regiments Capital directors Niven Pillay and Litha Nyhonyha.
Their arrests come four months after the release of the final state capture report, which placed Molefe at the centre of corruption, racketeering and fraud at Transnet.
At Transnet, the group of suspects is being arraigned on charges stemming from the locomotives transaction advisory tender that was awarded to a McKinsey-led consortium in 2012, resulting in the procurement of 1,064 locomotives worth more than R54bn. Regiments Capital was irregularly brought on board and ended up benefiting from the irregular appointment by Transnet in respect of the contract.
“Transnet is one of the primary and emblematic sites of huge looting of state funds at the peak of the state capture era. Enrolling these cases is therefore an important milestone and outcome of our complex investigations,” NPA spokesperson Mthunzi Mhaga previously said.
The case is part of the nine seminal state capture cases that were enrolled by the NPA before the end of September. The nine cases involve crimes including corruption, fraud and money laundering.
The cases so far include the ABB, SA Express and Optimum. In July, police arrested two former ABB employees and their spouses over an Eskom contract to ABB worth almost R550m.
Correction: October 6 2022
A previous version of this story published online and in Wednesday's print edition erroneously said McKinsey employee Goitseone Mangope was charged with fraud, theft and corruption related to state capture at Transnet. Mangope has not been charged and was in court as a representative of McKinsey. Business Day regrets the error.
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