Nedbank becomes third major creditor to cut ties with McKinsey
Nedbank has become the latest in a line of major financial institutions in South Africa to disassociate itself from McKinsey & Company, following the infamous Gupta scandal that unfolded in the country earlier this year. The scandal, which involved key businesses and influential political figures, has caused the firm severe reputational damage in recent months.
Earlier this year, reports emerged that McKinsey & Company, a US-based management consultancy, was involved in a scandal of major proportions. In essence, the firm allegedly participated in the illegal extraction of R1.6 billion from Eskom, a South African power supply company.
The sum was extracted by McKinsey in collaboration with Trillian, a firm owned by the Gupta family, who are known to have political ties that extend all the way to President Zuma. The Gupta family has acquired a reputation over the years for being “tenderpreneurs” i.e. businessmen with political ties.
The fee extracted was in violation of various South African codes of conduct, which has landed McKinsey in a world of trouble. The firm admitted the transgressions, but insisted that it was unaware of both the illegality of the operation, as well as the political ties involved.
David Fine, a Senior Partner at Mckinsey and formerly the leader of their South African practice, said of Trillian that it “withheld information about its connections to a Gupta family associate.” Moreover, after conducting an internal investigation, the firm has denied all charges of corruption and bribery that have been levelled. Nevertheless, civil society organisations have condemned the firm, and the business community appears to be following suit.
Last month, the firm abruptly lost two of its major financial clients, namely Standard Bank and Barclays South Africa (Absa), both of which had a long standing relationship with the firm. Now, McKinsey has lost yet another financial client, this time in the form of Nedbank, which is one of South Africa’s four largest banking groups, specialising in a wide range of wholesale and retail banking services.
Specifically, the bank will not consult McKinsey for any projects in the future, until such time as their name is legally cleared. A spokesperson for the bank said, “Nedbank has a zero tolerance to corruption and we expect our service providers, staff and clients to conduct themselves in an ethical manner, and with integrity.”
Speaking on the scandal in recent months, the firm’s Global Managing Partner, Dominic Barton, had previously said, “We are sorry for the distress this matter has caused the people of South Africa. We are taking a hard look at all of our practices in the country.” The firm operates with 250 employees in the country, and has temporarily suspended all its work with the public sector.
Big Four professional services firm KPMG also has alleged ties to the scandal, currently also under review, and the firm continues to run the risk of losing clients in the slipstream of the case.
