McKinsey agrees to pay back Transnet R688m, plus over R200m in interest

Transnet will get a timely R870 million bump in its balance sheet amid ongoing Covid-19 pressure, with the state-owned ports and rail group revealing on Tuesday that it has reached an agreement with US-based management consultancy McKinsey & Co to pay it back monies for contracts secured with Regiments Capital.

The fees totalled R688 million, however Transnet has managed to also secure interest on the sum of just over R200 million.

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 pay up to R1.2 billion back, including around R558 million in interest, according to Transnet’s calculations.

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“Transnet and McKinsey & Company announce that they have finalised the settlement on the fees McKinsey committed to return to Transnet at the Judicial Commission of Inquiry in December 2020,” the groups noted in a joint statement on Thursday.

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

The funds relate to McKinsey’s entanglement in state capture in South Africa, through Transnet contracts secured through 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) related to work done for another state-owned enterprise, Eskom. This contract was also tainted by the involved Regiments Capital.

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