By This photograph shows a logo of American multinational corporation McKinsey & Company on the first day of the Mobile World Congress (MWC), the telecom industry’s biggest annual gathering, in Barcelona on February 26, 2024.
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A subsidiary of top global consulting firm McKinsey & Company agreed to pay nearly $123 million to settle claims that it bribed government officials in South Africa, the U.S. Department of Justice said Thursday.
Federal prosecutors also unsealed a 2022 guilty plea by Vikas Sagar, a former senior partner at McKinsey who worked in the subsidiary’s South Africa office.
Sagar, 56, of Johannesburg, pleaded guilty in U.S. District Court for the Southern District of New York, to one count of conspiracy to violate the Foreign Corrupt Practices Act.
The subsidiary, McKinsey Africa, paid bribes to officials at two state-controlled utility companies in South Africa between 2012 and 2016 in order to secure lucrative consulting contracts, the DOJ said in a press release.
Prosecutors said McKinsey Africa obtained confidential information from the two companies, Transnet SOC Ltd. and Eskom Holdings SOC Ltd., about the contracts during the bidding process.
Then it submitted multimillion-dollar consulting engagement proposals, knowing that other South African consulting firms it had partnered with would pay part of their fees as bribes to Transnet and Eskom officials, the DOJ said.
The bribery scheme helped McKinsey and McKinsey Africa net approximately $85 million in profits, according to prosecutors.
McKinsey Africa has entered into a three-year deferred prosecution agreement with the DOJ related to a criminal charging document, called an information, charging McKinsey Africa with one count of conspiracy to violate the anti-bribery provisions of the FCPA, prosecutors said.
The deferred prosecution agreement requires McKinsey Africa to accept responsibility for the allegations.
“McKinsey Africa engaged in a serious and long-running bribery scheme to secure contracts by corrupting government officials,” Chad Yarbrough, assistant director of the FBI Criminal Investigative Division, said in the press release.
“This misconduct is a blatant violation of law and a breach of public trust. No matter what country the crime occurs in, the FBI will always work closely with our international partners to root out corruption,” said Yarbough.
“McKinsey welcomes the resolution of these matters and the closure of this regretful situation,” McKinsey Africa said in a statement Thursday.
“McKinsey is a very different firm today than when these matters first took place,” the subsidiary said, adding, “We fired Mr. Sagar soon after learning of these issues, returned our fees with interest, cooperated with the authorities, and made significant upgrades to our risk, legal, and compliance controls to ensure McKinsey sets the standard across our profession.”
