McKinsey will pay back the Eskom money – but only if courts say so

Global consultancy group, McKinsey, has responded to Eskom’s request for the firm to pay back R1.6 billion paid to it for “irregular” contract work – saying that it will only pay back the money if South African courts find the contracts were illegal.

McKinsey was contracted by Eskom to consult on the power utlity’s turnaround strategy, with Eskom saying last week that it had paid the group R1 billion for the contract. A further R564 million was paid to capital group, Trillian, for other contract work.

However, Trillian – which is tied to the controversial Gupta family – has been accused of being a front company for McKinsey to secure contracts worth billions of rands from Eskom and Trasnet, as well as receiving the multi-million rand payments for little to no work done on contracts.

Eskom has asked both companies for the money back.

In a statement on Tuesday, McKinsey said it would pay the money back only if the contracts were ruled to be illegal by South African courts. It said it would support a review by the High Court of the validity of its turnaround programme contract with Eskom.

“We invite Eskom and Trillian to submit themselves to this process too,” it said. “McKinsey will pay back the fee in full if the court determines Eskom acted unlawfully.”

The group insisted that the work it did for Eskom was worth the money paid to it, and that it performed its work in good faith.

“We believe our work on the turnaround programme created substantial value, helping improve operating performance by, among other things, increasing plant availability and reducing contractor claims on the new build programme.”

It said that it was Eskom’s responsibility to ensure that it followed the country’s laws and processes in signing off on the contract.

“It explicitly required Eskom to obtain the necessary approvals or consents required by the terms of the Public Finance Management Act. We were advised by Eskom on February 5 2016 that it received National Treasury approval and we have reviewed Eskom’s Steering Committee minutes from February 9 2016 that confirm that fact.

“Eskom now contends the contract should be held invalid because Eskom did not, in fact, receive the necessary approvals. We want this issue resolved and we have no interest in benefiting from an allegedly invalid contract,” it said.


Read: Eskom asks Trillian and McKinsey for its R1.6 billion back

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McKinsey will pay back the Eskom money – but only if courts say so