…For alleged shady dealings in South Afric
The brainpower behind the New Patriotic Party government’s economic management, McKinsey and Co Consultancy, is on a one-way street to a probe in the US, as South African anti- corruption groups move to launch complaints with authorities in the United States.
Corruption Watch (CW) plans to approach the US Department of Justice within two weeks to probe McKinsey, CW’s executive director, David Lewis, said in Johannesburg on Monday.
McKinsey is ensnared in corruption scandal involving the powerful S.A based Indian family, the Guptas, which is said to have leveraged its relationship with President Jacob Zuma to land many juicy state contracts.
Along with McKinsey, auditing firm, KPMG LLP, is also caught up in the scandal which entails the two American firms doing work for businesses tied to the Gupta family and President Jacob Zuma’s son.
“Instead of raising the alarm, these companies seemed to have played along,” according to Lumkile Mondi, a senior lecturer at the University of Witwatersrand, who was part of a group of eight academics that completed a study, in May, into how state-owned enterprises are being raided.
According to Mondi, McKinsey and KPMG, among other firms, undermined South African laws “in pursuit of profit.”
Democratic Alliance (DA), South Africa’s main opposition party, has joined anti-graft organizations to take their fight overseas, while waiting for South African prosecutors to act on allegations against the Gupta family.
Save South Africa, which includes civil-society groups and business leaders in SA, has also called on companies to drop KPMG because of the work it did for 36 entities tied to the Guptas since at least 2008.
Many of the accusations that ensnare McKinsey and KPMG are contained in a trove of leaked emails that local news organizations have reported on, indicating how the Guptas allegedly used their relationship with Zuma and other government officials to profit from government business with hired help from white collar big shots.
Both McKinsey and KPMG have started internal investigations into their dealings with the family, with KPMG’s South African Chief Executive, Trevor Hoole, and seven other senior staff, resigning their jobs. The firm has also committed to give up some $3million that it made from its dealings with the family.
McKinsey in July said it was reviewing documents related to work done for South Africa’s state-owned power utility, Eskom Holdings SOC Ltd. An interim report by Eskom and G9 Forensic, found McKinsey and Trillian Capital Partners Ltd, a company linked to the Guptas, made 1.6 billion rand ($121 million) in fees, and expected to make another 7.8 billion rand.
Trillian was dropped by McKinsey when the company failed due diligence. The consultancy is reported to have said that it informed Eskom and Trillian in March 2016.
However, McKinsey has maintained that the fees it made from Eskom were in line with similar projects.
“Our investigation is ongoing,” it said. “We haven’t discovered anything that would require us to notify U.S. authorities.”
Companies in the country will stop using McKinsey if it had to be fined, while KPMG’s South African business would be “in trouble” if one large corporation had to fire it, according to a report by the Daily Maverick.
The Guptas, originally from India and including brothers Atul, Rajesh and Ajay, moved to South Africa in the 1990s and are being accused of using their friendship with the president to influence government contracts and cabinet appointments.
Instead of McKinsey, which was privy to the shady dealings raising the alarm, it allegedly shut up, played along and got paid.
This is the same McKinsey which was hired by the NPP government to help manage Ghana’s economy.
In January, Finance Minister, Ken Ofori-Atta, had told Parliament’s Appointments Committee that indeed McKinsey had been engaged by the government to help manage the economy, even though there was no formal contract. Mr. Ofori-Atta had however said the company could be eventually contracted.
As of March, the company had been contracted.
McKinsey and Company was in charge as the Einstein behind the NPP’s economic management when the country was constrained to extend its program with the International Monetary Fund which had originally been scheduled to end in 2018 to 2019.
As McKinsey provided brainpower, it seems such genius had afforded Mr. Ken Ofori-Atta a lot of latitude to appoint friends and business associates from his private bank, Databank, into government posts.
Among others, Keli Gadzekpo, the Finance Minister’s business partner, with whom he co-owns Databank has been made Board member at the Bank of Ghana, while Rev. Daniel Ogbamey Tetteh, Vice President of Databank Financial Services has been appointed as Director General of the Securities and Exchanges Commission.
The Akufo-Addo government has also made Togbe Afede, a co-founder of Databank, Board Chairman for the National Investment Bank, while at least eight senior staff at the Finance Ministry have been replaced with Databank people.
The Ghana Revenue Authority and other financial institutions have not been spared the stranglehold of Databank on government.
With the current trouble brewing back home in the US for McKinsey, it looks like the credibility that Einstein gives the NPP government’s economic management has come under question marks.
Source: therepublicnewsonline.com/ Fiifi Samuels