Stakeholder in Trillian deal calls for more stringent regulations for consultants

07 November 2018 2 min. read
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In light of the Gupta scandal and the substantial repercussions still being felt across South Africa’s business and political environment, the Chairperson and Founder of South African strategy advisory firm Letsema Consulting Isaac Shongwe has expressed the need for consultants to be regulated with the same stringency as lawyers and accountants.

The Gupta scandal is one of many incidents across South Africa over the duration of the last year that have exposed the potential for consulting firms to – intentionally or not – find themselves in violation of regulatory boundaries. The incident revolved around the leveraging of political contacts to win a lucrative contract through illegitimate means.

Among the range of firms that felt the direct impact of the scandals is Gauteng-based Letsema Consulting. The firm was established in 1996, and offers a broad suite of services, including strategy and enterprise development, supply chain management, financial services.

The firm’s involvement in the Gupta scandal came about due to its collaborative arrangement with global management consultancy McKinsey & Company during the successful deal with Transnet. Following the entry of Trillian into the equation, Letsema was immediately sidelined from the contract.

Stakeholder in Trillian deal calls for more stringent regulations for consultants

The incident was particularly damaging for Letsema, given that the major share (60%) of its business until that point had come from Transnet. Following the move from McKinsey, Letsema “had to work hard to pivot into the private sector,” said Isaac Shongwe, Chairperson at Letsema.

Letsema is among a sea of victims, not only from the controversial Gupta scandal, but also from the subsequent scandals of corruption involving Big Four accounting and advisory firm Deloitte and Steinhoff International, as well as management consultancy Bain & Company and the South African Revenue Services.

Nevertheless, Shongwe disagrees with the recommendations being put forth that preventing the involvement of consultants with the state is the best solution. “To say government shouldn’t be using consultants is ridiculous. You need people with certain knowledge,” he said.”

According to Shongwe, the shift needs to come about in two domains, namely the attitudes of consultants themselves and the regulatory environment surrounding the consulting industry. For the former, he says that “Business schools need to do more than produce graduates who are obsessed with making as much money as possible.” To deal with the latter issue, he argues for a similar framework to that which governs lawyers and accountants.