McKinsey & Company Africa (Pty) Ltd has agreed to pay over $122 million in penalties to resolve an investigation into bribery allegations involving South African government officials.
The Bribery Scheme
Between 2012 and 2016, McKinsey Africa- a subsidiary of the global consulting firm McKinsey & Company Inc – through its senior partner Vikas Sagar, conspired to bribe officials at two South African state-owned entities:
- Transnet SOC Ltd.: The custodian of ports, railways, and pipelines.
- Eskom Holdings SOC Ltd.: The state-controlled energy company.
McKinsey Africa obtained sensitive non-public information to secure lucrative consulting contracts.
It partnered with South African consulting firms that paid portions of their fees as bribes to Transnet and Eskom officials.
McKinsey and McKinsey Africa earned $85 million in profits from these tainted contracts.
Looking for a job? Visit whatjobs.com today
Legal Proceedings and Penalties
McKinsey Africa entered into a three-year deferred prosecution agreement (DPA) and admitted to conspiring to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA).
Penalties
McKinsey Africa will pay $122.85 million. The Justice Department will credit up to 50% of this amount against penalties paid to South African authorities in related cases.
- Vikas Sagar’s Guilty Plea: The former senior partner pleaded guilty to one count of conspiracy to violate the FCPA.
Hiring? Post jobs for free with WhatJobs
Statements from Authorities
Principal Deputy Assistant Attorney General Nicole M. Argentieri emphasized the global significance of this case.
She said:
“McKinsey Africa bribed South African officials in order to obtain lucrative consulting business that generated tens of millions of dollars in profits.
“As a consequence, McKinsey Africa has agreed to pay a criminal penalty of more than $122 million. The resolution announced today — the department’s third coordinated resolution with South African authorities in only two years — is evidence that our International Corporate Anti-Bribery (ICAB) initiative, which we announced in November 2023, is bearing fruit.
“Through the ICAB, the Criminal Division remains committed to strengthening its international partnerships, including in South Africa, to combat corruption.”
Need Career Advice? Get employment skills advice at all levels of your career
U.S. Attorney Damian Williams highlighted McKinsey Africa’s breach of public trust:
“McKinsey Africa participated in a yearslong scheme to bribe government officials in South Africa and unlawfully obtained a series of highly lucrative consulting engagements that netted McKinsey Africa and its parent entity McKinsey & Company approximately $85 million in profits.
“The scheme was carried out by a senior partner at McKinsey and allowed McKinsey Africa to repeatedly get awarded consulting contracts through corruption and bribes at two different state-owned entities in South Africa.
This office and our law enforcement partners will continue our fight against American companies that seek to gain an unfair business advantage by supporting corrupt political officials overseas, no matter the industry, no matter the country, and no matter how prominent or profitable those companies may be.”
Compliance and Cooperation
McKinsey Africa’s penalty reflects a 35% reduction due to its cooperation with the investigation and remedial measures:
- Internal Cooperation: McKinsey Africa reported and preserved evidence, traced financial transactions, and provided detailed records, including personal email and banking information of involved employees.
- Enhanced Compliance:
- Anti-corruption training for employees in Africa.
- Ceased working with South African state-owned enterprises.
- Strengthened due diligence processes and risk reviews for public-sector clients.
- Voluntary repayment of revenues from tainted contracts in 2018 and 2021.
International Collaboration
The Justice Department coordinated efforts with South African authorities, leveraging the International Corporate Anti-Bribery (ICAB) initiative, launched in November 2023, to strengthen global anti-corruption enforcement.
Looking Forward
McKinsey Africa’s settlement underscores the growing global focus on corporate accountability. Companies operating internationally face increasing scrutiny and are urged to implement robust compliance programs to prevent corruption and restore public trust.
