McKinsey To Repay R650 million in Consulting Fees to Transnet and SAA, says Zondo Commission

Under the mounting pressure of state capture investigations, consulting behemoth McKinsey has pledged to return substantial consulting fees they earned from Transnet and the South African Airways (SAA). According to the Zondo Commission, the firm has vowed to repay about R650 million resulting from their contracts with both entities, though Transnet views this amount as inadequate.

This move by McKinsey follows a similar action in 2017 when the firm refunded Eskom R1 billion in consulting fees. Kevin Sneader, McKinsey's global chief, publicly apologised to South Africans in 2018, expressing regret for the company's involvement in state capture issues. However, he did not admit to a similar pattern of conduct at Transnet and SAA where McKinsey worked with the Gupta-linked Regiments Capital since 2012.

Today, the commission confirmed that McKinsey acknowledges its contracts with both state-owned entities were also corrupted. The exact amount to be refunded by McKinsey hasn't yet been fixed with Transnet and SAA, but it is likely to be around R650 million. Transnet refutes this figure, demanding R1.2 billion including interest.

Despite the dispute over the repayment sum, this development sets an important precedent. The Zondo Commission encourages other companies that profited from tainted contracts to return their ill-gotten gains, casting a cautious eye on their actions and making an example out of McKinsey's commitment.

Herein loom key questions about McKinsey's awareness of the illicit operations, specifically the extent of the company's willful blindness, a crime under America's Foreign Corrupt Practices Act. McKinsey, being US-based, falls under the purview of this Act. Thus, the outcomes of investigations into alleged corruption are keenly anticipated.

Despite McKinsey's resolve to refund the consulting fees earned in question, not all companies involved in the state capture have followed suit. The South African division of CRRC, China’s state-owned locomotive manufacturer, despite overwhelming evidence, denies allegations of Gupta and Essa kickbacks to secure Transnet contracts.