McKinsey Pays $122 Million for South Africa Bribery Scandal

McKinsey & Co. has settled a bribery investigation in South Africa with a payment of over $122 million, following allegations that the firm engaged in corruption tied to lucrative contracts with state-owned companies.

McKinsey & Company, the renowned global consulting firm, has reached a settlement totaling over $122 million to resolve an extensive bribery investigation linked to its operations in South Africa. This development, confirmed by federal prosecutors in New York, is indicative of the ongoing legal challenges faced by McKinsey, which has previously amassed close to $1 billion in settlements related to its controversial work with pharmaceutical companies amid the opioid crisis.

The settlement, part of a deferred prosecution agreement, stipulates that the bribery charges against the firm will be dismissed after three years provided it fulfills the conditions outlined in the deal. Additionally, former senior partner Vikas Sagar, who was at the helm of McKinsey's Johannesburg office, has pleaded guilty to conspiring to breach anti-corruption laws, as reported by prosecutors.

The accusations against McKinsey stem from its engagement with two state-owned entities in South Africa over a decade ago: one responsible for the country's ailing power generation and the other overseeing freight and port operations. Prosecutors revealed that Sagar had access to sensitive information that facilitated multimillion-dollar contracts, re-routing some of McKinsey's earnings to officials as bribes.

U.S. Attorney for the Southern District of New York, Damian Williams, stated, "McKinsey Africa participated in a yearslong scheme to bribe government officials in South Africa and unlawfully obtained a series of highly lucrative consulting engagements," which reportedly earned the firm $85 million in profits.

A significant investigation by The New York Times in 2018 had previously highlighted McKinsey's contentious dealings in South Africa, marking it as a critical error in the firm's near-century-long history. The emergence of McKinsey’s participation in boosting sales for Purdue Pharma during the U.S. opioid crisis shed more light on the company’s questionable practices, surfacing further scrutiny that continues to evolve through ongoing federal investigations.