This photo shows the logo of the American multinational McKinsey & Company during the first day of the Mobile World Congress (MWC), the telecommunications industry’s largest annual event, in Barcelona on February 26, 2024.
Paul Barrena | AFP | Getty Images
A subsidiary of top global consulting firm McKinsey has agreed to pay nearly $123 million to settle charges that it bribed South African government officials. The U.S. Department of Justice stated Thursday.
Federal prosecutors also released a 2022 guilty plea by Vikas Sagar, a former senior partner at McKinsey who worked in the firm’s South Africa office.
Sagar, 56, from Johannesburg, plead guilty to Charged in the U.S. District Court for the Southern District of New York with one count of conspiracy to violate the Foreign Corrupt Practices Act.
The U.S. Department of Justice said in a news release that the subsidiary, McKinsey Africa, paid bribes to officials at two South African state-owned utility companies between 2012 and 2016 to obtain lucrative consulting contracts.
Prosecutors said McKinsey Africa obtained confidential information about the contract from two companies, Transnet SOC Ltd. and Eskom Holdings SOC Ltd., during the bidding process.
The DOJ said it then submitted a multimillion-dollar proposal for a consulting engagement because it knew other South African consulting firms it was working with would pay some of the fees as bribes to Transnet and Eskom officials.
The bribery scheme helped McKinsey and McKinsey Africa net profits of about $85 million, according to prosecutors.
Prosecutors said McKinsey Africa has entered into a three-year deferred prosecution agreement with the Department of Justice in connection with a criminal charging document titled “Information” charging McKinsey Africa with one count of conspiracy to violate the FCPA. Bribery clause charges.
The deferred prosecution agreement requires McKinsey Africa to accept responsibility for the charges.
“McKinsey Africa engaged in a serious and lengthy bribery scheme to obtain contracts by corrupting government officials,” Chad Yarbrough, assistant director of the FBI’s Criminal Investigation Division, said in a news release.
“This misconduct is a flagrant violation of the law and public trust. Regardless of the country in which the crime occurred, the FBI will always work closely with our international partners to root out corruption,” Abel said.
“McKinsey welcomes the resolution of these issues and the end of this regrettable situation,” McKinsey Africa said in a statement on Thursday.
“McKinsey & Company is a very different firm today than it was when these issues first occurred,” the subsidiary said, adding, “We fired Mr. Sagar shortly after learning of these issues, along with his salary.” Lee refunded our fees, cooperated with authorities and made significant progress “upgrading our risk, legal and compliance controls to ensure McKinsey sets the standard in our industry.” “
About The Author
