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McKinsey has agreed to pay $122mn to authorities within the US and South Africa over its position in a sprawling corruption scandal in the course of the administration of former South African president Jacob Zuma.
The consulting group paid bribes to win tens of millions of {dollars} of consulting work with South African state-owned corporations between 2012 and 2016, based on a deferred prosecution settlement introduced by the US justice division on Thursday and an announcement by South Africa’s Nationwide Prosecuting Authority.
One in every of McKinsey’s former senior companions in Johannesburg, Vikas Sagar, has additionally pleaded responsible to collaborating in a conspiracy to violate the US International Corrupt Practices Act, US prosecutors mentioned on Thursday. The plea was entered in a New York courtroom in 2022 however had been stored underneath seal whereas the investigation continued.
“McKinsey Africa participated in a yearslong scheme to bribe authorities officers in South Africa and unlawfully obtained a sequence of extremely profitable consulting engagements that netted McKinsey Africa and its mum or dad entity McKinsey & Firm roughly $85mn in income,” mentioned Damian Williams, the US lawyer for the Southern District of New York.
McKinsey and Sagar bribed officers at Transnet, South Africa’s rail freight monopoly, and the vitality firm Eskom for data that helped win consulting work, US prosecutors mentioned, by knowingly permitting native associate corporations to funnel cash to officers on the two state-owned corporations.
The agency acquired leniency from US prosecutors partly as a result of it had co-operated with the investigation, the justice division mentioned.
In an announcement, McKinsey mentioned it carried out an in depth probe of its personal into “the corrupt conduct of a former associate, Vikas Sagar, who hid his illegal conduct from the corporate and his colleagues after which sought to cowl up his conduct. McKinsey terminated his employment greater than seven years in the past.”
The agency mentioned it was happy to resolve the investigations and that it was dedicated to “regaining the belief” of the folks of South Africa. The $122mn will probably be break up 50-50 between the US authorities and South Africa’s felony belongings restoration account, which funds legislation enforcement efforts.
South African prosecutors have spent years investigating the systematic pilfering of public contracts, identified regionally as “state seize”, in the course of the Zuma presidency, which led to 2018.
Two years in the past, an official fee of inquiry concluded that the enterprise dynasty of the Gupta brothers had used affect with Zuma to function a “racketeering enterprise” at Transnet by receiving contracts that favoured their pursuits or these of associates. The Guptas and Zuma denied any wrongdoing.
Further reporting by Rob Rose in Johannesburg
