McKinsey agrees to pay back Transnet R870 million

Transnet will get a timely R870 million bump in its balance sheet, with the state-owned ports and rail group announcing on Tuesday it had reached an agreement with management consultancy McKinsey & Co to repay fees for contracts secured through Regiments Capital.

The fees total R688 million, but Transnet has also managed to secure interest on the sum of just more than R200 million.

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This follows Transnet disputing the amount owed by McKinsey in December last year, after the Zondo Judicial Commission into Allegations of State Capture announced that a settlement had been reached.

At the time Transnet wanted McKinsey to repay up to R1.2 billion, including around R558 million in interest, according to Transnet’s calculations.

“Transnet and McKinsey & Company announce they have finalised a settlement on the fees McKinsey committed to return to Transnet at the judicial commission of inquiry in December 2020,” they noted in a joint statement.

“The full and final settlement of R870 million includes the fees paid to McKinsey in respect of theprojects undertaken with Regiments Capital, plus interest,” the statement said.

The funds relate to McKinsey’s entanglement in state capture in South Africa with Transnet contracts secured through the Gupta-linked Regiments Capital. Both McKinsey and Regiments Capital are among the private sector companies that have appeared before the Zondo Commission.

McKinsey has already paid back more than R1 billion (including interest) for work done for another state-owned enterprise, Eskom. This contract was also tainted by the involvement of Regiments Capital.

This story first appeared on Moneyweb and has been republished with permission.