A top US consultancy has moved against one of its South Africa directors as part of a widening probe involving Eskom contracts that netted a Gupta-linked entity a share of a R10-billion bonanza.
The development capped a week of bad news for the Guptas, prompting speculation that their empire in South Africa may be crumbling.
This has been reinforced by the growing possibility of charges being filed in US courts, despite the inaction shown by South African authorities.
McKinsey South Africa director Vikas Sagar has been suspended after it emerged that he misrepresented the company in a transaction involving Gupta-linked company Trillian Capital Partners and Eskom.McKinsey spokesman Steve John confirmed that Sagar and the company had agreed to a temporary leave of absence while an internal investigation continues. He said the matter had not been reported to law enforcement in the US.
"Our investigation, assisted by Norton Rose Fulbright, has not discovered anything that would require us to notify US authorities. If we discover pertinent facts we will take appropriate action," he said.
John said, however, that the matter was viewed in such a serious light that McKinsey's global legal counsel, Jean Molino, and global risk officer, Tom Barkin, were last week deployed to South Africa to oversee the investigation. They have been joined by global MD Dominic Barton.
"We take these issues very seriously. We are committed to ascertaining facts and swiftly taking any and all appropriate action," John said.
Two days before a meeting in December 2015 to discuss the spreadsheet, Sagar sent Wood an e-mail detailing plans of how McKinsey would help Trillian grow on the back of Eskom's turnaround programme.
John confirmed the discussion, but said the two companies had worked together only on one Eskom mandate.
In March 2016, the plan was dealt a blow when McKinsey's global risk committee rejected the proposed tie-up, after its due diligence identified Trillian majority shareholder and Gupta ally Salim Essa as a "politically exposed person"."We explored what the partnership could look like, including understanding Trillian's capabilities ... As a consequence of our review, we decided not to enter into a supplier development partnership with Trillian."
A politically exposed person presents a higher risk for potential involvement in bribery and corruption by virtue of proximity to politicians and the influence they may wield. The risk associated with Essa led Trillian to cut ties with the businessman, thecompany said yesterday.
No contract, lots of cash
Almost R300-million of the Eskom payments to Trillian were made between April and August 2016 - in the months right after McKinsey informed Eskom of the risk committee's decision.
A timeline of events suggests the relationship between McKinsey and Trillian came about as a result of the Gupta family's failed attempt to purchase a controlling stake in local boutique financial advisory firm Regiments Capital.
The December meeting came less than six months after Wood's former partner at Regiments Capital, Niven Pillay, rejected the Gupta family's offer. Pillay this week told how Wood took him to a meeting at the Guptas' Saxonwold compound, where one of the Gupta brothers, Tony, offered to make him a dollar billionaire if he remained as CEO when the deal went through.
Advocate Geoff Budlender SC, who was appointed by Trillian chairman Tokyo Sexwale to investigate allegations that the company was party to state capture - including having prior knowledge of the removal of Nene as finance minister - found that Eskom paid R266-million to Trillian without contracts between April and August 2016.Both Molefe and Singh feature prominently in former public protector Thuli Madonsela's investigation into the Gupta family's alleged involvement in state capture. Molefe made a tearful exit from Eskom after the report was published last year, returned after a brief stint in parliament, and was removed by Public Enterprises Minister Lynne Brown after pressure from the ANC and civil society.
Singh and another Eskom executive, Matshela Koko, are among several senior government figures who have been exposed for receiving undeclared holidays in Dubai paid for by the Gupta family.
Leaked Gupta e-mails show that Sagar, Essa and Tony Gupta were interacting as far back as 2013 when Sagar had a colleague at McKinsey put together a document on the valuation of a uranium/gold mine.
Sagar, using an anonymous Gmail address, forwarded the advice to Essa and Tony Gupta.
Scathing indictment
Sagar this week referred all queries to McKinsey.
An executive with intimate knowledge of the deal questioned how Trillian could have worked on Eskom mandates at the start of 2016, when the company only officially existed after March of that year.
"I don't understand how the invoices could have been paid by both Eskom and Transnet prior to that date when their entire team was still employed at Regiments."
An analyst who investigates multinational corruption in Africa said: "If it could be established that McKinsey were party to, and benefited from, corrupt deals in South Africa, they would indeed be liable for prosecution in the US under the Foreign Corrupt Practices Act. But that would depend on the circumstances...