On December 5, 2024, DOJ announced a settlement with McKinsey and Company for $122 million for bribes paid to South African government officials to secure valuable consulting contracts.
Between 2012 to 2016, McKinsey Africa, acting through former senior partner Vikas Sagar, who plead guilty in 2022, conspired to pay bribes to high-ranking officials at two South African state-owned enterprises: Transnet SOC Ltd., which was the custodian of ports, rails, and pipelines in the country, and Eskom Holdings SOC Ltd., South Africa’s state-owned energy company.
In exchange for these bribery payments, McKinsey Africa obtained sensitive confidential and non-public information from Transnet and Eskom through local South African businesspeople regarding the award of consulting contracts. McKinsey Africa then used that information in proposals it submitted for multimillion-dollar consulting engagements, while knowing that South African consulting firms with which McKinsey Africa had partnered would pay a portion of their fees as bribes to officials at Transnet and Eskom. As a result of the bribery scheme, McKinsey and McKinsey Africa earned profits of approximately $85 million.
McKinsey agreed to a three-year deferred prosecution agreement (“DPA”) under which McKinsey Africa agreed to pay a fine of $122,850,000, which included a 35 percent discount. The DOJ agreed to credit up to $61,425,000 of the fine for what the company will pay South African authorities for violations of South African law related to the same conduct alleged in the information. The DOJ noted both McKinsey and McKinsey Africa’s cooperation and remediation. The McKinsey resolution was the third coordinated resolution with South African authorities in only two years.
McKinsey and McKinsey Africa have also agreed to enhance their compliance program where necessary and to report to the government regarding remediation and implementation of their enhanced compliance program.
Under the Corporate Enforcement Policy, DOJ reached this resolution with McKinsey Africa based on a number of factors, including, among others, the nature and seriousness of the offense. McKinsey Africa received credit for its cooperation with the department’s investigation, which included (i) immediately and proactively cooperating from the inception of the investigation; (ii) making numerous factual presentations to the department over the course of its investigation, derived from information obtained through the company’s internal investigation; (iii) collecting, reviewing, and producing voluminous records, including those located abroad, in response to requests from the department; (iv) promptly reporting the discovery of document-deletion efforts by the McKinsey partner involved in the conduct found during its internal investigation, taking additional investigative steps to uncover information and evidence regarding those efforts, and producing such information and evidence to the department; (v) reporting, in real time, newly discovered information and documents that allowed DOJ to preserve and obtain evidence as part of its independent investigation; (vi) tracing complex internal accounting money-flows and currency exchange-information in response to requests from the department; (vii) preserving, collecting, and producing to DOJ documents located abroad, and engaging a third-party forensics consultant to analyze key electronic devices and providing to DOJ; (viii) collecting and producing to DOJ personal email and bank account information of the McKinsey partner involved in the conduct relevant to the department’s investigation; (ix) engaging with DOJ in response to a deconfliction request to preserve the integrity of DOJ’s investigation; and (x) making company officers and employees available for interviews.
McKinsey and McKinsey Africa also engaged in timely remedial measures, including: (i) putting the McKinsey partner involved in the criminal scheme on leave when it learned of the partner’s role in the scheme, subsequently separating that partner from McKinsey after discovering his deletion activity, and requiring that partner’s continued cooperation post-separation; (ii) conducting additional anti-corruption training for employees in South Africa and elsewhere in Africa, and ceasing work with all state-owned enterprises for a period of time while it conducted its internal investigation; (iii) enhancing due diligence processes for third-party partners, including instituting controls to ensure that due diligence is completed before work begins on an engagement and imposing a more rigorous risk-review for public sector clients; (iv) carrying out an enhanced review process for all sole-source work that requires advance-approval before the engagement can begin; and (v) voluntarily repaying, in 2018 and 2021, all revenues that McKinsey and McKinsey Africa received from potentially tainted contracts to the SOEs in South Africa from which they received contracts as a result of the criminal scheme.
