McKinsey Africa deferred prosecution agreement (2024)

What the US resolution covers

DOJ said McKinsey Africa entered the deferred prosecution agreement in connection with a criminal information filed in the Southern District of New York ². The information charged one count of conspiracy to violate the anti-bribery provisions of the FCPA ¹. The parent, McKinsey & Company Inc., is named in the release as bound with McKinsey Africa to keep cooperating and to strengthen compliance programs where needed ¹.

The agreement filed on the docket is document 7 in case 1:24-cr-00669, filed 5 December 2024 and 61 pages long ⁴. This page relies on the DOJ releases for the agreement's terms, as the posted copy could not be read as text.

The conduct described by DOJ

DOJ said that from at least 2012 through 2016, McKinsey Africa, acting through a senior partner, agreed to pay bribes to then-officials at Transnet SOC Ltd and Eskom Holdings SOC Ltd ^1,2. The SDNY release describes Transnet as South Africa's state-owned "custodian of ports, rails, and pipelines" and Eskom as its state-owned energy company ².

According to DOJ, McKinsey Africa obtained confidential information about consulting contracts and worked with South African consulting firms, knowing part of their fees would be paid as bribes ¹. DOJ said McKinsey and McKinsey Africa earned profits of about US$85,000,000 from the scheme ². The release does not state the total value of the bribes ¹.

Penalty, credit and cooperation

DOJ said the US$122,850,000 penalty reflects a 35% reduction off the fifth percentile of the otherwise applicable Sentencing Guidelines fine range, in light of cooperation, remediation and McKinsey's prior history ¹. The department agreed to credit up to one-half of the criminal penalty against amounts McKinsey pays to authorities in South Africa in related proceedings ².

DOJ listed cooperation steps including factual presentations, production of documents located abroad, tracing of money flows, forensic analysis of devices and making employees available for interviews ¹. It said the company reported the discovery of document deletion by the partner involved ¹.

Remediation listed by DOJ includes separating the partner, more anti-corruption training, a pause on work with state-owned enterprises, stronger third-party due diligence, and voluntary repayment in 2018 and 2021 of all revenues from potentially tainted contracts to the South African state-owned entities ^1,2. The release does not say McKinsey Africa voluntarily self-disclosed the conduct ¹.

The South African NPA resolution

On 6 December 2024 SAnews, the South African government news agency, reported that the National Prosecuting Authority had reached a resolution with McKinsey South Africa, coordinated with the US proceedings ³. The NPA called it a corporate alternative dispute resolution ³. The report does not name a specific legal mechanism or a South African court ³.

Under the resolution McKinsey will pay about R1.1 billion to the state ³. The NPA said the former partner's conduct helped McKinsey win Transnet and Eskom contracts worth nearly R2 billion, and that McKinsey had already repaid all fees on those contracts with interest ³.

The NPA said McKinsey must keep giving information to the Investigating Directorate Against Corruption, maintain an anti-corruption compliance programme with a senior compliance official reporting to the board, and that the NPA can reopen its investigation if McKinsey breaches the conditions or gives materially false information ³.

Related individual case

DOJ said Vikas Sagar, a former McKinsey senior partner in South Africa, pleaded guilty to one count of conspiracy to violate the FCPA, and that his plea was unsealed with the company resolution ¹. The SDNY release says he pleaded guilty before U.S. District Judge Laura Taylor Swain on 16 December 2022 ².