McKinsey admits to 'several errors of judgment' in Eskom deal

"We are embarrassed by these failings and we apologise to the people of South Africa" (Reuters)

"We are embarrassed by these failings and we apologise to the people of South Africa" (Reuters)

McKinsey has admitted that it failed to follow its own administrative processes and made several lapses of judgment in its work for Eskom with Gupta-linked Trillian. 

The global consultancy firm released a statement on Tuesday apologising for the errors after conducting a four-month long internal probe. It said, however, that it found no intention of wrongdoing and has not fired any staff over the issue.

Eskom wants the company and Trillian 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 that they should pay back what they earned from the contract, because it was unlawful.

In a statement last week, 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”.

The consultancy firm, in its latest statement, says it “mobilised our teams too quickly” and admitted that it started work with Trillian in 2015 before completing its due diligence or finding “answers to our questions”. It said a letter “authorising invoicing or payment, should not have been issued”. Senior partner Vikas Sagar, who was investigated for instructions in the letter, has decided to leave the firm the statement read.

“There are things we wish we had done differently and will do differently in the future, but we reject the notion that our firm was involved in any acts of bribery or corruption related to our work at Eskom and our interaction with Regiments or Trillian,” said Tom Barkin, McKinsey’s global chief risk officer.

“We are embarrassed by these failings and we apologise to the people of South Africa, our clients, our colleagues, and our alumni, who rightly expect more of our firm.”

McKinsey says it will not begin any work with state-owned enterprises in South Africa until a newly formed and independent South Africa SOE Risk Committee approves it. 

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