McKinsey will pay back the money on condition court finds Eskom acted unlawfully

McKinsey responded on Tuesday that it had no interest in benefitting from an unlawful contract. (Reuters)

McKinsey responded on Tuesday that it had no interest in benefitting from an unlawful contract. (Reuters)

Global consulting firm McKinsey will only pay back the R1-billion Eskom has demanded if a court finds that the power utility “acted unlawfully”.

McKinsey released a statement on Tuesday - the deadline day Eskom had given the company to pay back the R1.03-billion it was reportedly paid for six months’ of work last year. 

The power utility has said that the contract it signed with McKinsey was “unlawful… invalid and void”. In a letter of demand, Eskom told McKinsey and the Gupta-linked Trillian company, who also benefited from the deal, that they should pay back what they earned from the contract, because it was unlawful. 

In its statement on Tuesday, McKinsey laid the blame squarely on Eskom, saying the power utility had earlier confirmed that the contract was above board. McKinsey was hired to improve Eskom’s performance through a “turnaround programme”.

“Our contract with Eskom for the turnaround programme was approved by Eskom. It explicitly required Eskom to obtain the necessary approvals or consents required by the terms of the Public Finance Management Act [PFMA],” McKinsey said in statement.

McKinsey said that Eskom assured the firm that National Treasury had approved the contract, as is required by the Public Finance Management Act (PFMA). But Treasury had, in fact, cancelled the contract.

McKinsey will now rely on the high court review of the contract to determine if it should pay back the R1.03-billion it received from Eskom. It maintains that it “performed its work in good faith”.

Eskom has threatened court action of its own should McKinsey fail to pay back the money on Tuesday. The power utility said in its letter of demand that it would take McKinsey and others who benefited from the contract to court in a case of corruption, fraud and theft. 

McKinsey responded on Tuesday that it had no interest in benefitting from an unlawful contract and had put the money Eskom paid to it in a “ring-fenced account ready to comply with the court’s decision”.

Trillian has yet to respond to Eskom’s pay back deadline. 

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