R2 billion blow to major international firm for role in state capture in South Africa
McKinsey & Co. has agreed to pay more than $122 million (R2.2 billion) to resolve criminal allegations tied to a corruption scandal involving former leaders of South Africa’s ports and rail operator Transnet.
The US Justice Department agreed not to proceed with a case against the consulting firm if it engages in no further misconduct for 3 1/2 years, federal prosecutors and defence lawyers said at a Thursday court hearing in New York.
The agreement resolves both a US investigation and charges brought against McKinsey by South Africa’s National Prosecuting Authority.
The firm pleaded not guilty to a single count of conspiracy on Thursday before US District Judge Colleen McMahon.
McKinsey said in a statement that it will continue to cooperate with US and South African authorities and “welcomes the resolution of these matters and the closure of this regretful situation.”
The consulting firm was retained to advise state-owned Transnet on the purchase of 1,064 locomotives, which cost R54 billion ($3 billion).
In a statement, the Justice Department said McKinsey made $85 million as part of the alleged bribery scheme.
The firm repaid $63 million in fees to Transnet in 2021. The Justice Department said a former senior McKinsey partner, Vikas Sagar, previously pleaded guilty to conspiring to violate US foreign bribery laws.
Contact information for Sagar or his lawyers couldn’t immediately be located.
The agreement also resolves US and South African investigations into McKinsey’s work for another South African state-owned enterprise, power utility Eskom.
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