McKinsey director takes 'leave of absence' following Trillian probe

Johannesburg – A South African director at global consultancy firm McKinsey & Company has taken a leave of absence, following reports that he misrepresented the firm in a deal involving Gupta-linked Trillian Capital Partners.

A spokesperson for McKinsey confirmed to Fin24 by email that Vikas Sagar has taken a temporary leave of absence.

"To allow our review to proceed in an open and transparent way, and to allow Vikas Sagar the time to focus on our review, we have mutually agreed with Vikas that he take a temporary leave of absence, effective 6 July 2017," said Bonita Dordel, director of external relations Africa.

McKinsey is reviewing a report on Trillian by Advocate Geoff Budlender, in which the firm has been implicated. Trillian’s outgoing chairperson Tokyo Sexwale called for the investigation following allegations that executives at Trillian were aware of former finance minister Nhlanhla Nene’s axing weeks before it happened, and that the group would secure government contracts with Des van Rooyen at the helm of Treasury.

READ: McKinsey says it ditched Trillian partnership over shareholder flags

The report, released in June, details other situations related to alleged state capture. Sexwale wants the report to be included in a judicial inquiry into state capture.

The report explained that major state-owned enterprises such as Eskom and Transnet have a Supplier Development Programme (SDP) in which certain service providers are required to engage with local service providers, for the latter to gain experience and skills.

McKinsey was engaged to undertake work on behalf of Eskom and Transnet. Budlender had sent written questions to McKinsey’s Benedict Phiri to enquire if the firm had partnered with Trillian as part of the SDP.

McKinsey informed Budlender that the firm had not worked on any projects in which Trillian was an SDP or subcontractor to the firm.

McKinsey confirmed to Fin24 that although it considered a supplier development partnership with Trillian, it did not go ahead with it over concerns about Trillian’s shareholding.

However, in the report Budlender shared a letter submitted by McKinsey’s director Sagar to Eskom, in which he informed the power utility that McKinsey subcontracted a portion of services to be performed by Trillian.

FULL DOCUMENT: Damning Trillian report on state capture

Phiri told Budlender that it would look into the matter but had not submitted any new information required by Budlender at the time the report was finalised. The firm also elected not to make further submissions.

In an email to Budlender, Phiri wrote: “For clarity, McKinsey’s position is that, in light of the informal nature of your inquiry in the context of the various legal and regulatory processes around Trillian, it is inappropriate to furnish further comment with respect to this matter.”

In the report Budlender remarked that McKinsey had not provided an explanation for the inconsistency. “McKinsey has neither suggested that the letter apparently signed by its director is not genuine, nor provided any explanation for this inconsistency, despite repeated invitations to do so.

"It has refused to provide any explanation,” Budlender said. 

Budlender said that the matter requires further investigation, by an institution or person with “legal powers” to compel McKinsey to provide the relevant information.

McKinsey previously told Fin24 that Budlender’s findings are being reviewed and the firm is investigating the matter along with law firm Norton Rose Fulbright.

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