Two banks drop McKinsey in fallout from South Africa scandal – Washington Post

Barclays Africa and Standard Bank said on Monday they would stop working with McKinsey, a further blow to the global consulting firm as it faces allegations of bribery for work done with friends of South African President Jacob Zuma.

Privately held McKinsey, the world’s largest management consulting firm, has denied doing anything illegal but said this month that it was embarrassed by mistakes it made while working with South African state utility Eskom last year.

Earlier this month, McKinsey said it regretted working on a 1.6 billion rand ($113 million) contract at Eskom alongside a company controlled by the Gupta family, wealthy friends of Zuma who are accused of unduly influencing government contracts.

Zuma and the Guptas deny wrongdoing.

Barclays Africa and Standard Bank told Reuters in separate emailed responses to questions that they would terminate their relationships with McKinsey without giving reasons.

McKinsey declined to comment Monday.

The Gupta brothers, who work with Zuma’s son, Duduzane, were accused by South Africa’s anti-corruption watchdog last year of using control over state agencies to siphon public funds.

South Africa’s parliamentary committee on public enterprises is investigating whether McKinsey knowingly let funds from Eskom be diverted to Gupta-controlled firm Trillian as a way of securing the deal.

Corruption Watch, a South African anti-graft NGO, is preparing a submission to the U.S. Justice Department asking it to investigate McKinsey’s dealings with Trillian.

McKinsey first admitted wrongdoing earlier this month, saying that an internal investigation had found “violations of our professional standards” but did not uncover any acts of bribery or corruption. It added that it had parted ways with some staff involved in its work at Eskom.

“The behaviors of some individuals fell short of our standards. Some of our processes were inadequate and we have acted to reinforce compliance and improve them,” Tom Barkin, McKinsey’s global chief risk officer, said in a statement on Oct. 17.

“We are embarrassed by these failings and we apologize to the people of South Africa,” the statement said.

McKinsey said it never worked with the Gupta family and did not have a contractual relationship with Trillian.

A February 2016 letter written by one of McKinsey’s directors, Vikas Sagar, authorizing Eskom to pay Trillian as a McKinsey subcontractor “inaccurately characterized” their relationship, McKinsey said.

South Africa’s political opposition Democratic Alliance says McKinsey steered funds to Trillian to secure an inflated contract with Eskom that could have totaled 9.4 billion rand ($705 million) over four years, a draft McKinsey-Trillian partnership document, seen by Reuters, showed.

McKinsey has said it will repay fees it has earned if the contract with Eskom is found to be illegal.

McKinsey has said it stopped working with Trillian after the company failed due diligence in March 2016. McKinsey has said it regrets ever working alongside the Gupta firm.

— Reuters

Two banks drop McKinsey in fallout from South Africa scandal – Washington Post

Leave a Reply

Your email address will not be published. Required fields are marked *