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Africa|McKinsey Agrees to Pay $122 Million to Settle South Africa Bribery Case
https://www.nytimes.com/2024/12/05/world/africa/mckinsey-bribery-case-south-africa.html
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The global consultancy was accused of bribing foreign government officials. A former senior partner pleaded guilty to a conspiracy charge.
By Michael Forsythe and Walt Bogdanich
Michael Forsythe and Walt Bogdanich have reported on McKinsey, including its work in South Africa, for several years, and in 2022 published a book about the firm.
Dec. 5, 2024, 5:59 p.m. ET
McKinsey & Co. agreed to pay a fine of more than $122 million to resolve a felony bribery investigation stemming from its work in South Africa, federal prosecutors in New York said in a filing unsealed Thursday. It is the latest in a string of legal penalties for the global consulting firm, which in recent years has agreed to pay about $1 billion in settlements for its work with opioid manufacturers.
The fine announced Thursday was part of a deferred prosecution agreement that would dismiss the bribery charge against the company after three years if McKinsey meets the conditions of the deal. Separately, a former McKinsey senior partner, Vikas Sagar, who was a leader in its Johannesburg office, pleaded guilty to conspiring to violate an anti-corruption law, prosecutors said.
The bribery investigation stemmed from work that McKinsey’s South African branch performed, starting more than a decade ago, for two state-owned companies: one overseeing the country’s run-down electric generating system, the other managing its freight rail system and ports. Mr. Sagar received confidential information about the companies that led to multimillion-dollar consulting contracts, and in return, some of the money McKinsey and its local partners made was routed to two officials as bribes, prosecutors said.
“McKinsey Africa participated in a yearslong scheme to bribe government officials in South Africa and unlawfully obtained a series of highly lucrative consulting engagements” that netted McKinsey $85 million in profits, Damian Williams, the U.S. attorney for the Southern District of New York, said in a statement.
When The New York Times published a 2018 investigation into McKinsey’s contracts in South Africa, the firm’s questionable work there was considered its biggest mistake in its nearly 100-year history. But the next year, with the United States in the grip of an opioid epidemic, McKinsey’s extensive work to “turbocharge” sales at Purdue Pharma, the maker of the painkiller OxyContin, became public. McKinsey’s work with opioid makers is the focus of an ongoing federal criminal investigation.
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