McKinsey Africa Agrees to Pay $122 Million Settlement for Bribery of South African Officials

McKinsey Africa enters into a three-year deferred prosecution agreement with the U.S. Department of Justice, agreeing to pay more than $122 million (approximately R2.2 billion) to resolve criminal charges for conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act. The charges stem from McKinsey Africa’s role in bribing officials at South Africa’s state-owned Transnet and Eskom between 2012 and 2016.

Former McKinsey senior partner Vikas Sagar, who worked in McKinsey Africa’s South Africa office, previously pleaded guilty to one count of conspiracy to violate the FCPA. The DOJ determines that McKinsey Africa obtained sensitive confidential information from Transnet and Eskom while knowing that South African consulting firms with which McKinsey had partnered would pay bribes to officials. As a result of the bribery scheme, McKinsey and McKinsey Africa earned approximately $85 million in profits.

Separately, South Africa’s National Prosecuting Authority claws back R1.1 billion from McKinsey and its subsidiary through a Corporate Alternative Dispute Resolution process, bringing total penalties to over R3.3 billion. This represents a strategic victory for South Africa’s fight against corruption and accountability for the ‘state capture’ scheme that systematically looted public resources during the Zuma presidency.

McKinsey suspended work for state-owned companies in South Africa more than eight years ago when reports about corruption first surfaced. The firm’s managing partner for Africa acknowledges: ‘Losing trust and confidence happens very quickly,’ indicating that rebuilding McKinsey’s reputation will be a long process. The settlement marks the first major accountability for international consulting firms that enabled South Africa’s state capture corruption.