Consultancy McKinsey SA had will not earn a cent for the project management work it was employed to do lobby group Business for South Africa (B4SA). This after the embattled agency withdrew from B4SA after being charged with tender fraud at state-owned rail company Transnet.
The question of payment is now a moot point since McKinsey withdrew of its own accord, according to B4SA chair Martin Kingston.
"B4SA accepted their proposal under the circumstances. McKinsey withdrew of their own volition," said Kingston.
"McKinsey would have been compensated appropriately for their support. As they have withdrawn, the question is moot," he added.
B4SA is a business grouping initially set up as a volunteer organisation to harness the power of private businesses to help mitigate the devastating impacts of the Covid-19 pandemic. It has since expanded its mandate to address a number of "priority" areas that impact the SA economy, including energy, transport and logistics, water, greenfield infrastructure and crime and corruption.
"We believe that based upon our experience over the past two years we should be able to effectively harness the resources, skill, and expertise of the private sector in working with government to address these key areas," said Kingston.
He said McKinsey had been retained to provide project management support to B4SA on a number of its priority initiatives.
During the state capture era, McKinsey shared lucrative contracts at key state-owned enterprises with Regiments or Trillian. Its withdrawal from B4SA comes after the National Prosecuting Authority indicted it on charges of fraud, theft and corruption related to state capture at Transnet.
The NPA's Investigating Directorate announced at the end of September that it had charged former McKinsey director Vikas Sagar and current employee Goitseone Mangope.
Mangope and Sagar join a host of other top executives from the government and private sector who have already been charged in the case.
These include Transnet's former CEOs Brian Molefe and Siyabonga Gama, the company's former finance chiefs Anoj Singh and Garry Pita, and its former group treasurer, Phetolo Ramosebudi.
The case relates to a tender awarded to a consortium led by McKinsey SA a decade ago to advise the state-owned freight rail operator on buying 1 064 locomotives to upgrade its ageing fleet. The cost the project ended up ballooning from R38.6 billion to R54.5 billion.
Also in the dock are Regiments executives Eric Wood, Niven Pillay and Litha Nyhonhya, Trillian Asset Management director Daniel Roy, and Albatime's Kuben Moodley.
McKinsey said it decided to "pause" its participation with B4SA to not "compromise the important work and key public-private interventions of B4SA to support South Africa's economic growth".
"One of the requirements of our work would require productive engagement with relevant public sector entities," it said.
"We have decided that it is in the interest of all parties that McKinsey withdraw from this work, and B4SA has accepted that this course of action is, unfortunately, the most appropriate under the circumstances."
McKinsey, which has paid back the fees it earned from the Transnet project, said last week that it would oppose its inclusion in the case.
"We remain deeply remorseful that our firm has in any way been associated with the dark era of state capture. We publicly apologised and chose to take accountable action where we made mistakes," it said.
"Given no new information has been presented since the commission [of inquiry into state capture], we believe pursuing McKinsey does not have merit and we will defend ourselves against any claims."