McKinsey Agrees to Repay $74 Million to South Africa's Eskom After State Capture Scandal

McKinsey & Company reaches a settlement with South African power utility Eskom Holdings and a unit of the prosecuting authority, agreeing to return approximately R1 billion ($74 million) in fees earned on work for the electricity producer. Eskom had asked McKinsey to pay back the funds the previous year after an internal inquiry found that the state power utility’s decisions to make the payments were unlawful. McKinsey together with Trillian were paid R1.6 billion for a ‘Turnaround Plan’ carried out at Eskom between January and July 2016. The scandal involves McKinsey’s partnership with two local consulting firms closely linked to the Gupta-Zuma corruption network: Regiments and Trillian. Senior officials friendly to the Zuma-Gupta network abused their positions to award contracts to McKinsey, Regiments, and Trillian, who worked on multi-billion-rand projects from which the Guptas earned billions in kickbacks. Regiments and Trillian, with the knowledge of McKinsey, paid the majority of their earnings on to the Guptas’ network of money laundering vehicles. McKinsey partner Vikas Sagar, who ran the South African office, was allegedly colluding with Gupta henchman Salim Essa to bring Regiments Capital (which later morphed into Trillian) in as required supply development partners. McKinsey global boss Kevin Sneader apologizes in person to South Africans in July 2018: ‘I am very sorry personally and on behalf of McKinsey & Company for the fact that we have had anything to do with any of the issues surrounding State Capture.’ The repayment represents one of the first financial consequences for McKinsey’s entanglement in authoritarian corruption schemes.