According to the US Justice Department on Thursday, McKinsey and Company Africa Ltd, a subsidiary of McKinsey & Company, has agreed to pay over $122 million to settle a U.S. investigation into a bribery scheme in South Africa.
The privately owned McKinsey Africa faced a charge of one count of conspiracy for breaching the Foreign Corrupt Practices Act by agreeing to pay bribes to officials at the state-owned energy firm Eskom and the port and freight rail operator Transnet in return for confidential information regarding consulting contracts.
McKinsey Africa has entered into a three-year deferred prosecution agreement with the Justice Department.
“McKinsey Africa engaged in bribing South African officials to secure lucrative consulting contracts that generated substantial profits,” said Nicole M. Argentieri, the head of the Justice Department’s Criminal Division.
Vikas Sagar, a senior former partner at McKinsey, had previously admitted guilt to one count of conspiracy to violate the act.
In a statement, McKinsey said that Sagar had hidden his actions from the company and was terminated shortly after the company became aware of the issues.
According to the Justice Department, McKinsey and McKinsey Africa profited approximately $85 million through bribery. Eskom had engaged McKinsey to assist in implementing a “turnaround plan.”
The inefficiencies at Eskom and Transnet have hindered growth in Africa’s most industrialised nation for over a decade.
The Justice Department noted that McKinsey Africa had received credit for cooperating in the investigation and providing anti-corruption training to its employees. The $122,850,000 that McKinsey has consented to pay includes a penalty to be paid in South Africa.
Additionally, McKinsey is in discussions with the Justice Department regarding a payment of over $600 million to resolve a separate investigation into the consulting firm’s support for opioid manufacturers to increase sales, which allegedly contributed to a serious addiction crisis, according to sources familiar with the situation.
