Coke and Sasol become first non-financial firms to drop McKinsey in SA

17 January 2018 3 min. read

Management consultancy Mckinsey & Company’s woes in South Africa have escalated, with their loss of business now extending beyond the financial sector. Global soft drink manufacturer Coca Cola have severed ties with the firm for its South Africa units, and oil company Sasol have refused further contracts with the firm.

The Gupta family scandal has shaken South Africa, implicating major players across the business world all the way to the highest levels of government, and damaging several reputations along the way. One of the firms that has faced the brunt of the scandal has been US-based consulting firm McKinsey & Company.

The firm was allegedly involved in a collaborative scam with local consultancy Trillian (owned by the Gupta family), whereby a sum of R1.6 billion was illegally extracted from local power production company Eskom. The family has ties with president Zuma, having previously employed his son, and have developed a reputation for abusing their position of influence.

Although McKinsey was involved in the deal with Eskom, the consulting firm has stated that it was in the dark with respect to the political connections involved and the legal violations that were being made in the process of the transaction. As expressed by Senior Partner at the firm and former leader of their South Africa practice, David Fine; “(Trillian) withheld information about its connections to a Gupta family associate.”

Coke and Sasol become first non-financial firms to drop McKinsey in SA

The firm has since conducted an internal investigation, and has denied charges of corruption and bribery, despite increased criticism from civil society and the general public. Nevertheless, the firm’s reputation has taken a severe blow in the country, which has resulted in a steady stream of lost business.

So far, clients which have severed ties with the firm have been from the world of credit and finance. Standard Bank and Absa were the first creditors to drop the firm, followed by Nedbank in recent months.

Now, the firm has begun to lose business in other sectors of industry, specifically in the soft drink and oil industrial segments. Both Coca-Cola and Sasol have announced a severing of ties with the firm.

Sasol, an oil company that relies on coal for oil production is currently engaged in long-term projects with the firm. Specifically, McKinsey is aiding the firm with the digitisation of its chemicals business, as well as business improvements in the mining segment. Following completion, Sasol will award no further business to the firm.

Coca-Cola, on the other hand, despite having worked with McKinsey in the past, has no pending business with the firm, but has declared that no new business will be awarded.