McKinsey SA to pay R1.1bn for criminal conduct of partner Vikas Sagar

The National Prosecuting Authority (NPA) announced on Thursday it had concluded an alternative dispute resolution with McKinsey & Company’s subsidiary, McKinsey South Africa. 

It said McKinsey South Africa will help the Investigating Directorate Against Corruption in its criminal investigations by continuing to hand over information and material in its possession.

“McKinsey will also pay R1.1bn into South Africa’s Criminal Assets Recovery Account in recognition of the social and economic harm caused by the conduct of a former employee in South Africa (Vikas Sagar),” NPA spokesperson Mthunzi Mhaga said. 

The NPA said McKinsey & Company is a global strategy and management consultancy firm that focuses on the development of institutions, companies and infrastructure for increased sustainability and growth. It said McKinsey South Africa started operating in 1995 and had provided extensive support to companies and state-owned enterprises. 

The NPA said the resolution was the product of co-operation between the NPA and the US department of justice and was co-ordinated with US criminal justice processes that resulted in a settlement agreement confirmed on Thursday by a US federal court.

“In terms of the resolution, McKinsey admits, accepts and acknowledges responsibility under South African law for the criminal actions and conduct of Vikas Sagar, who was a former partner of McKinsey during the relevant period. As a result of Sagar’s corrupt actions, McKinsey was awarded contracts with Transnet and Eskom amounting to nearly R2bn,” Mhaga said.

He said McKinsey has already made financial restitution to these entities by returning all fees paid to it, with interest.

Asset Forfeiture Unit head Ouma Rabaji-Rasethaba welcomed the resolution, saying it was yet another significant step that took South Africa forward in fighting crime.

“The NPA remains committed not only to prosecuting criminals but also to contributing to the economic recovery of the country through restitution.

“Corporate alternative dispute resolutions address both of these mandates of the NPA in a cost-effective, impactful way,” Rabaji-Rasethaba said.

Mhaga said the resolution also obliged McKinsey to continue investing in its extensive local and international corporate compliance anti-corruption programme to prevent and detect future corrupt practices.

“South Africa joins a growing list of countries that employ alternative dispute resolution mechanisms to combat foreign bribery and corruption. These include the US, UK, Germany, France, Brazil, Kenya, Malaysia, Singapore, Mexico and Canada.” 

TimesLIVE