McKinsey & Company Africa has agreed to pay over $122 million to settle a U.S. Justice Department investigation into its involvement in a bribery scheme with South African officials.
The agreement, announced on Thursday, resolves allegations that McKinsey Africa paid bribes to secure consulting contracts with state-owned enterprises Transnet and Eskom between 2012 and 2016.
The payments were allegedly made in exchange for confidential information that provided the firm with a competitive edge in securing lucrative contracts.
The investigation revealed that McKinsey Africa, operating through local partners, funnelled bribes to officials at Eskom and Transnet. These generated huge profits, estimated at $85 million for both McKinsey and its parent company.
The firm has entered into a deferred prosecution agreement (DPA) with the Justice Department, admitting to conspiracy charges under the Foreign Corrupt Practices Act (FCPA).
As part of the resolution, McKinsey Africa has agreed to a criminal penalty of $122.85 million, half of which may be credited towards fines imposed by South African authorities.
This settlement follows the guilty plea of Vikas Sagar, a former senior partner at McKinsey Africa, who admitted to conspiring to violate the FCPA.
McKinsey stated that Sagar’s actions were concealed from the company, and he was dismissed upon the firm’s discovery of the misconduct.
U.S. Attorney Damian Williams commented, “This resolution shows that corruption will not be tolerated, regardless of industry or prominence.”
The case is the latest in a series of high-profile investigations into corporate corruption, with McKinsey’s conduct about the impact of such schemes on fair competition and public trust.
In addition to the financial settlement, McKinsey has committed to implementing tough compliance measures, including enhanced due diligence, anti-corruption training, and more oversight of public sector engagements. This aims to help the company restore its reputation and prevent future violations.
This case reveals increased collaboration between U.S. and South African authorities, the third such coordinated investigation in two years.
The U.S. Justice Department’s International Corporate Anti-Bribery initiative continues to target corruption in multinational operations, sending a message to companies about the risks of dishonest conduct in emerging markets.
