McKinsey & Company Africa, a subsidiary of the U.S.-headquartered management consulting firm McKinsey, has agreed to pay a hefty sum north of $120 million to settle allegations of bribery involving South African government officials. Announced by the DOJ, this resolution involved the firm's participation in a multi-year strategy to secure profitable consulting contracts through corrupt practices, including paying off officials at state-owned enterprises. According to the U.S. Attorney's Office for the Southern District of New York, this scheme enabled McKinsey Africa to pull in around $85 million in profits.
The case was brought to light in the Southern District of New York, where McKinsey Africa entered a deferred prosecution agreement in response to a charge of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA). In the midst of these legal proceedings, a former Senior Partner at McKinsey, Vikas Sagar, pleaded guilty to participating in the bribery conspiracy. U.S. Attorney Damian Williams remarked, "This Office and our law enforcement partners will continue our fight against 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."
Further details have surfaced indicating that the corrupt activities were conducted between 2012 and 2016, with the involvement of South African firms Transnet and Eskom. The partnered South African consulting firms were implicated in paying bribes to officials at these state-owned entities to secure the consulting engagements. As part of its plea, McKinsey Africa is required to pay a criminal penalty, more than half of which may be credited against payments made to South African authorities in related proceedings. The company also agreed to enhance their compliance program and to report on its implementation.
The resolution was based on several factors, including the seriousness of the offense and McKinsey Africa's cooperation with the investigation, as stated by the U.S. Attorney's Office. The involved McKinsey partner was placed on leave, subjected to additional investigation, and eventually separated from the firm. Notably, the company had already voluntarily returned revenues deemed tainted from the contracts acquired through the illicit scheme. The prosecution of the case has been led by Assistant U.S. Attorneys and the Criminal Division’s Fraud Section, with assistance from various U.S. and South African agencies.
The pursuit and resolution of this case underscore the ongoing international commitment to combat corporate corruption. The DOJ's ICAB initiative aims to fortify partnerships worldwide in this fight, and as Principal Deputy Assistant Attorney General Nicole M. Argentieri highlighted, the settlement with McKinsey Africa reflects the burgeoning success of this mission.
