McKinsey agrees to pay $122 million to settle South African bribery charges in the US
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- Consulting firm McKinsey has agreed to pay over $122 million to settle bribery claims.
- The plan earned McKinsey and McKinsey Africa profits of about $85 million, the US DoJ said.
- A former senior partner at the firm's Africa division pleaded guilty to a conspiracy charge.
McKinsey has agreed to pay more than $122 million to settle bribery claims stemming from its work in South Africa, the US Justice Department said in a statement on Thursday.
The payment forms part of a three-year deferred prosecution agreement that would dismiss the charges if McKinsey met certain conditions.
The consulting firm was under investigation for its involvement in a plan to pay bribes to officials at two state-owned and operated companies in South Africa between 2012 and 2016.
According to court documents and admissions, a senior partner agreed to pay bribes to receive confidential and non-public information from officials at Eskom, South Africa's largest energy company, and Transnet, a port and freight rail operator, which helped secure multimillion-dollar consulting contracts. Under the arrangement, McKinsey Africa's partners paid a portion of their fees as bribes to officials at Transnet and Eskom.
The Justice Department said that McKinsey and McKinsey Africa earned profits of about $85 million as a result of the arrangement.
The firm was charged with one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) in the Southern District of New York.
"McKinsey Africa bribed South African officials in order to obtain lucrative consulting business that generated tens of millions of dollars in profits," said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department's Criminal Division.
A former McKinsey senior partner, Vikas Sagar, separately pleaded guilty to one count of conspiracy to violate the FCPA.
In a statement, McKinsey said that Sagar had concealed his conduct from the company and had been fired. It added that fees had been repaid to Eskom and Transnet several years ago.
"We publicly apologized in 2018 and chose to take accountable action, including taking responsibility for Sagar's conduct," McKinsey said in the statement.
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"McKinsey welcomes the resolution of these matters and the closure of this regretful situation. McKinsey is a very different firm today than when these matters first took place," the firm said.
McKinsey and Company Africa operates in South Africa as a wholly owned and controlled subsidiary of the international consulting firm. The $122,850,000 that the firm has agreed to pay includes a penalty in South Africa.
The Justice Department said McKinsey Africa had received credit for cooperating with its investigation and conducting anti-corruption training for employees.
McKinsey, which is widely considered one of the top three strategy consulting firms in the world, is also close to paying $600 million to settle a separate investigation into its work advising opioid manufacturers on how to boost sales, the FT reported in November.