Rebuilding McKinsey & Co.’s reputation in South Africa after it was implicated in state corruption scandals will be a long process, its top executives in Africa said, adding that the consulting firm is biding its time on resuming bidding for government work.
In addition to undertaking remedial steps and firing implicated staff, McKinsey worked for free this year on global business meetings linked to South Africa’s hosting of Group of 20 gatherings. Still, even that drew stinging criticism from the office of President Cyril Ramaphosa.
“Losing trust and confidence happens very quickly,” Gregor Theisen, McKinsey’s managing partner for Africa, said in an interview. “Rebuilding takes a lot of time. This story will never be over and we will always carry it with us and therefore it is a journey, and the journey will take us years.”
The company was embroiled in the scandals during an era of government graft — known locally as State capture — that also involved Bain & Co., SAP SE, KPMG LLP and ABB Ltd.
Last year, McKinsey agreed to pay more than $122-million to resolve criminal allegations made in a US investigation of its ties to impropriety involving former leaders of state-owned ports and freight-rail operator Transnet.
It has also paid back fees to State power utility Eskom and the national airline, South African Airways.
McKinsey suspended work for State-owned companies in South Africa more than eight years ago — around the time reports about corruption surfaced. It also co-operated with authorities investigating graft and took steps to bolster due diligence and compliance with local laws.
It lost private-sector clients as the scandals unfolded, prompting it to redeploy employees to offices in other countries.
To date, the firm has had no formal discussions with the government about resuming state work.
“It’s an internal decision until we feel comfortable and confident with all our internal risk frameworks,” said Adolf Makgatho, McKinsey’s managing partner for South Africa. If “we think we can get real impact and we think that it’s in line with our risk frameworks, yes, we’ll probably look into it. But at the moment, no,” he said.
Still, the company remains committed to South Africa and sees improvements in the local economy as opportunities to strengthen its corporate consulting business.
“You cannot have a successful Africa practice without having a successful South African practice,” Theisen said. The country “is a significant engine for the continent and because we follow our clients, it’s also important for us. So we remain heavily invested in this market.”
That’s a contrast with the approach that rival Bain has taken. It shut down its local consulting business in July after the government in 2022 banned it from working with the state.
McKinsey’s existing clients are active in financial services, mining and manufacturing.
Former clients that cut ties with the company during the corruption scandals are now seeking to learn more about the remedial actions it has undertaken and to re-establish relationships, according to Makgatho. In line with company practice, he declined to identify them.
“Old clients, some of whom we haven’t served for a while, are now reaching out for work,” Makgatho said. “Now, I think things are in a better shape and there is a positive trajectory.”
The consulting firm, which also has offices in Angola, Egypt, Ethiopia, Kenya, Morocco and Nigeria, sees Africa as a key part of its global growth strategy.
Already, it is increasingly advising companies setting up tech hubs in East Africa and expects the continent to draw more interest from those keen on the transitioning to clean energy, improving food security, building new markets and tapping local talent pools, Theisen said.
“We are hiring,” Theisen said. “Across all locations” in Africa, he added.
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