A McKinsey & Co. subsidiary agreed to pay more than US$122 million to resolve allegations it paid bribes to officials at two South African state-owned companies to help the firm win millions of dollars of consulting work, reports the
Wall Street Journal (6 December, Smagalla). McKinsey Africa was charged with one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and as part of the settlement, the subsidiary entered into a three-year deferred prosecution agreement, according to prosecutors in Manhattan. Vikas Sagar, a former McKinsey senior partner in the consulting firm’s Johannesburg office who participated in the bribery scheme, pleaded guilty in December 2022 to one count of conspiracy to violate the FCPA, according to the US Justice Department. Sagar’s guilty plea was unsealed on Thursday. McKinsey said it conducted an investigation into the conduct of Sagar and terminated his employment more than seven years ago, adding that it has “zero tolerance” for such conduct. Prosecutors said that McKinsey Africa, through Sagar, agreed to pay bribes to officials who at the time worked for Transnet SOC, South Africa’s state-owned rail, port and pipeline company, and Eskom Holdings SOC, the country’s state-owned power company. In exchange for the bribes, the consulting firm allegedly received confidential, nonpublic information about the awarding of consulting contracts between at least 2012 and 2016. The firm, according to prosecutors, then set proposals for consulting engagements with the knowledge that the South African consulting firms McKinsey had partnered with would pay a portion of their fees as bribes to Transnet and Eskom officials. The firm ultimately earned around US$85 million in profit as a result of the bribery scheme, prosecutors said.
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