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Investigations into Gupta associations at Eskom discovered a host of improprieties at the state-owned utility. One of these was the fact that consulting firm McKinsey was found to have invalid contracts with Eskom. The consultancy’s initial response to this was to say that it would pay R1 billion fee it had earned from working with Eskom back only if the courts ordered it to do so.

Late last year, the Pretoria High Court authorised the freezing of R1.6 billion in assets earned by McKinsey and Trillian. The court made the decision after a request by the National Prosecuting Authority (NPA).

McKinsey not sure where to repay Eskom moneyMcKinsey has now done an about-turn, stating that it doesn’t want anything to do with the “tainted” money. “McKinsey does not want tainted money. So if the court decides that payment was valid, McKinsey will still give that money back to South Africa,” says Senior Partner Dave Fine.

However, the company’s desire to give the money back has been hampered by its apparent inability to find the right recipient. According to the Financial Times, McKinsey “isn't sure” where to send the money.

The Financial Times reports that since agreeing to return the fee, McKinsey CEO Dominic Barton has been unable to get a clear indication from government where it should be paid. The firm initially wanted to return the money directly to Eskom, but with the changes in the board and the “political hand constantly being over” the utility, Barton said it caused confusion. “These uncertainties made me question whether the money would then just be used to enable something else to happen,” he said.

Fine is adamant that McKinsey’s change of heart is not an admission of guilt. “We are not paying the money because we did something wrong. I just want to be explicit about that. We went into the relationship with Eskom in good faith, and they told us they had the Treasury approvals for the risk arrangement. The fact that they did not is why we want to give back the money,” he says.

According to Barton, the scandal has hit McKinsey’s business in South Africa hard, with many big companies – including big banks – disassociating themselves from the consultancy. He said that the R1 billion refund has also hit the group’s partners.

Image credit: https://www.mckinsey.com/our-people/dominic-barton

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