The National Prosecuting Authority (NPA) said it has reached a resolution with McKinsey South Africa, to pay back some R1.1 billion to the state for the role the company played in State Capture.
NPA Asset Forfeiture Unit Head, Deputy National Director of Public Prosecutions, Ouma Rabaji-Rasethaba, said the resolution is a “significant step that takes South Africa forward in fighting crime”.
“The NPA remains committed not only to prosecuting criminals but also to contributing to the economic recovery of the country through restitution. Corporate alternative dispute resolutions address both of these mandates of the NPA in a cost-effective impactful way.
“Such resolutions are a globally recognised and proven crime fighting method. This strategy is to be embraced as South Africa recovers from the effects of state capture,” Rabaji-Rasethaba said.
The NPA further said that McKinsey will also assist the NPA Investigating Directorate Against Corruption in its “criminal investigations by continuing to hand over information and material in its possession”.
“The Resolution is the product of international co-operation between the NPA and the United States Department of Justice [US DOJ] and was co-ordinated with US criminal justice processes that resulted in a settlement agreement confirmed today by a US Federal Court.
“In terms of the Resolution, McKinsey admits, accepts and acknowledges responsibility under South African law for the criminal actions and conduct of Vikas Sagar, who was a former partner of McKinsey, during the relevant period. As a result of Sagar’s corrupt actions, McKinsey was awarded contracts with Transnet and Eskom amounting to nearly R2 billion.
“McKinsey has already made financial restitution to these entities by returning all fees paid to it, with interest. This Resolution has already greatly assisted in moving investigations concerning implicated individuals forward for decisions to be made regarding any prosecutions,” the NPA said.
The company is obliged to “continue investing in its extensive local and international corporate compliance anti-corruption programme to prevent and detect future corrupt practices”.
“A dedicated senior compliance official is required who reports to the Board on compliance matters and who holds significant independence. McKinsey previously fulfilled this obligation by hiring a Global Chief Ethics and Compliance Officer in 2021. There are also anti-corruption requirements when contracting with third parties such as supplier development partners.
“Significant due diligence must be carried out before the conclusion of such deals. Compliance is to be monitored and audited on an ongoing basis.
The NPA added, McKinsey is bound by conditions in the resolution or risk the re-opening of the investigation against it.
“To ensure fulfilment of these commitments, the Resolution permits the NPA to reopen its investigation concerning McKinsey should it fail to implement that programme, fail to provide the necessary co-operation with the ongoing South African investigations into the relevant conduct referred to in the Resolution, or in the event that it provides materially false, incomplete or misleading information to the NPA,” the NPA said.
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