McKinsey and Company Africa Pty Ltd: More Fees for Less Work

In the McKinsey and Company Africa Pty Ltd FCPA case, the company admitted in a criminal agreement that partner fees funded bribes for public consulting contracts. Those contracts came from Transnet and Eskom. A local partner’s fee grew as its work shrank, and a rejected partner stayed on the job.

McKinsey Africa entered its deferred prosecution agreement with the Justice Department on December 5, 2024. It was a South African subsidiary wholly owned and controlled by McKinsey & Company, and both companies accepted the agreement’s statement of facts as true. A former McKinsey senior partner separately pleaded guilty to conspiring to violate the Foreign Corrupt Practices Act.

Under the company’s admitted account, the scheme ran from at least around 2012 through around 2016 and generated approximately $85 million in profits for McKinsey and McKinsey Africa. Transnet operated South Africa’s ports, railways and pipelines. Eskom was its public power utility. Both were government-owned and government-controlled businesses, and the officials involved held authority over procurement and contracting. The people steering public spending were also helping arrange who would benefit from it.

The Local Partner and the Growing Fee

The local-partner requirement gave the scheme a ready-made payment route. The criminal agreement explains that McKinsey Africa’s access to Transnet contracts depended partly on engaging local businesses under South Africa’s Black Economic Empowerment and localization policies. The customer would pay part of the consulting fee to McKinsey Africa and part directly to its local partner.

In the admitted account, a Transnet board member suggested a particular consulting firm and helped arrange a restaurant meeting with its representatives. The senior partner used his influence inside McKinsey Africa to encourage its selection. The official also introduced a businessperson who became the intermediary for communications about the contracts and the division of fees.

That intermediary conveyed confidential information from the official and helped arrange contract awards. The senior partner understood that part of the local firm’s fees would benefit the intermediary and the official. The agreement describes what happened as the relationship developed:

We see the commercial absurdity in that comparison: the partner’s contribution shrank while its share of the customer’s money grew. For someone staffing the engagement or approving the fee split, the work allocation and the payment allocation tell different stories. The people who knew what the partner actually delivered could see something the contract’s description would hide.

Confidential Information Before the Contract Award

McKinsey Africa’s criminal admissions describe information moving in both directions. The intermediary supplied confidential details about competitors and Transnet’s decision-making, including advance assurances that McKinsey Africa would win consulting work concerning locomotive purchases. The senior partner sent confidential McKinsey Africa information back, including work plans and the proposed division of fees.

The agreement also describes how they tried to keep those exchanges out of ordinary business channels. The senior partner and intermediary met in coffee shops, restaurants and other locations around Johannesburg, limited written communications and often used personal email. It also records the company’s discovery and reporting of the senior partner’s document-deletion efforts.

McKinsey Africa admitted that its personnel helped draft Transnet’s requests for proposals and internal memoranda justifying awards without a public tender. They later did the same at Eskom. Some of those employees had not been told about the bribery scheme, but their work helped prevent competitors from competing fairly and ensured awards went to McKinsey Africa on a sole-source basis.

This is procurement bribery visible in the documents that precede an invoice. The consultant seeking the work was helping write the customer’s justification for giving it the work. A competing firm’s disadvantage was already built into the award process, before any comparison of the quality or price of its services.

At Eskom, the Fee Split Came Before the Meeting

The admitted scheme followed executives who moved from Transnet to Eskom in around 2015. A new local consulting firm ultimately replaced the earlier partner, and an Eskom official pressed for a 50/50 fee split. The intermediary and the new partner’s personnel pushed the senior partner for the same division.

In November 2015, the new firm’s personnel asked for proof of the agreed split before the intermediary would arrange a meeting with key Eskom executives. The senior partner replied from his personal email account with a confidential internal spreadsheet. It showed the new partner’s projected share as the equivalent of hundreds of millions of U.S. dollars in revenue.

The senior partner understood that part of that share would go to the Eskom official in exchange for the award, according to the admitted facts. Eskom awarded the contract in around December 2015. The spreadsheet connected the commercial forecast to the access the intermediary was arranging: a proposed division of public consulting fees had become a condition for getting in the room.

The Partner Failed Due Diligence and Stayed on the Job

McKinsey Africa admitted that it began the Eskom work alongside the new partner before completing due diligence on the firm. In around March 2016, it rejected the firm after the firm’s responses to its inquiries proved inadequate. It notified Eskom that it would not engage the firm as its local partner.

The work continued anyway. The agreement says McKinsey Africa kept working alongside the rejected firm until Eskom notified it in June 2016 that the contract would be terminated. McKinsey Africa’s work for Eskom ended in around November that year. A rejection in the approval file and a continuing relationship on the project are facts an insider can connect.

The Fresenius Medical Care case offers a useful comparison about what happened after an internal warning. A 2022 case study in the Journal of Forensic and Investigative Accounting describes an Angolan warehousing relationship:

In McKinsey Africa’s admitted account, the firm was rejected and the working relationship continued. In the study’s account of Fresenius, an internal audit flagged the relationship and payments continued. We want to understand who received the concern, who controlled the next decision and what happened to the work and money afterward.

What the Partner Delivered and Where the Money Went

A consulting engagement leaves records of the promised work, the people assigned to do it, the fees and the customer’s approval. The industry distinction that matters here is between the person authorizing a payment, the business receiving it, the ultimate beneficiary and the official controlling the contract. Those roles can sit in different organizations, while a single invoice shows only the immediate recipient.

The South African conduct admitted by SAP shows why the onward payment matters. In its criminal deferred prosecution agreement, SAP described commissions that passed through an intermediary to an official’s businesses:

That sequence gives the service description a concrete test: what work supported the commission, and where did the recipient send the money? McKinsey Africa’s own admissions connect part of the partner fees to official benefits. An insider who knows the work allocation may supply one part of that connection, while someone familiar with payment approvals or the beneficiary supplies another.

The Investigation and the Returned Fees

The Justice Department’s announcement of the McKinsey Africa agreement identified the FBI’s Los Angeles International Corruption squad and the U.S. Postal Inspection Service as investigators. The agreement records that McKinsey and McKinsey Africa voluntarily repaid all revenues from potentially tainted contracts to the affected South African state-owned enterprises in 2018 and 2021.

Who Inside the Engagement Saw It

We work with you to connect what you know about the consulting engagement to the decisions behind its fees. Someone on the consulting team may know who did the work while someone in procurement knows who insisted on the partner. Finance may hold the fee revisions, approvals and account details, and compliance may hold the unanswered diligence questions. We connect those different views to the contract decisions and payments they explain.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Foreign-bribery matters have separate whistleblower reward programs, which we assess with you against the facts of your matter.

You Know Why That Partner Was There

If you saw a partner’s fees grow while its work disappeared, or watched an engagement continue after the partner failed review, speak to one of our Whistleblower Experts about why that partner was paid. We build the case around the decisions and payments you understand, bring in foreign-bribery whistleblower lawyers with the expertise your matter needs, and stay beside you as the case develops.