McKinsey bleeds two bank clients - report

Johannesburg – Standard Bank [JSE: SBK] and Barclays Africa (ABSA) [JSE: BGA] will not be renewing their contracts with global consulting firm McKinsey & Co, Business Times reported on Sunday.

Standard Bank’s spokesperson Ross Linstrom confirmed that the bank “elected to terminate” McKinsey’s services and said that the consultancy has been informed of the decision.

However McKinsey’s director of external relations Africa Bonita Dordel, declined to comment. “Consistent with our longstanding approach, we never comment on matters relating to clients,” she said in an email.

ABSA is yet to respond to Fin24’s request for comment.

This comes after the firm was implicated in the #GuptaLeaks for allegedly unlawfully netting a contract with Eskom, with the help of Gupta-linked Trillian Capital Partners.

The firm has faced public backlash, with civil society groups such as Save South Africa and Future SA calling for a probe.

Meanwhile Eskom had called for McKinsey and Trillian to repay R1.6bn. This amount was “unlawfully paid out in 2016 and 2017” to the companies, Eskom said in a statement.

McKinsey has said that it would pay the R1bn, if a court determines that it has acted unlawfully. McKinsey has also stood by the work it did for Eskom, although the circumstances surrounding the awarding of the contract have been called into question.

"These requirements were solely Eskom’s responsibility. McKinsey entered into the contract and performed its work in good faith," the firm said previously.

Earlier this month as its internal probe conducted by law firm Norton Rose Fulbright neared completion, McKinsey admitted that it found violations of its professional standards but denied being involved in bribery and corruption.

In the statement, McKinsey said that it had never made payments to secure contracts with Eskom.

Exodus of KPMG’s clients

Audit firm KPMG has also bled a number of clients after the #GuptaLeaks revealed it allegedly new of R30m worth of public money used to pay for a Gupta family wedding. Several of KPMG’s executives have left the firm in an effort for it to rebuild and move forward.  

Among the clients which left include Foschini, Munich Re of Africa, Sasfin, Sygnia Asset Management, AVI, Hulisani, Wits University and Telkom.

According to a report by City Press, Standard Bank was holding off on a decision to cut ties with the audit firm over concerns about the impact such a move would have on the stability of the financial system.

“Guided by the SA Reserve Bank, we are concerned to prevent systemic risks to the stability of the financial system that might arise from replacing a large financial services group’s auditors without a carefully planned transition,” the bank said.

ABSA which also makes use of KPMG’s services, said in a statement that it would “continuously reconsider” its position as more information becomes available from the investigations which are currently underway.

The Reserve Bank has said it would await the outcomes of independent investigations before making decisions and pronouncements on KPMG.

On Saturday Gauteng MEC of Finance Barbara Creecy, in a written response to questions posed to the Gauteng Legislature, explained that the provincial government is seeking legal advice regarding its contracts with KPMG.

The contracts are related to internal auditing and probity audits of tenders.

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