An African sub­sidiary of the con­sult­ing firm McK­in­sey & Com­pa­ny Inc. will pay a crim­i­nal penal­ty of more than US$122 mil­lion to re­solve a US Jus­tice De­part­ment in­ves­ti­ga­tion in­to a years-long scheme to bribe South African gov­ern­ment of­fi­cials, US au­thor­i­ties said Thurs­day.

The scheme in­volved bribes to of­fi­cials with South Africa’s state-owned and state-con­trolled cus­to­di­an of ports, rails, and pipelines, as well as its state-con­trolled en­er­gy com­pa­ny in or­der to se­cure con­tracts, ac­cord­ing to the Jus­tice De­part­ment. It net­ted McK­in­sey Africa and its par­ent com­pa­ny US$85 mil­lion in prof­its be­tween 2012 and 2016, of­fi­cials said.

The Jus­tice De­part­ment has en­tered in­to a de­ferred pros­e­cu­tion agree­ment with McK­in­sey Africa, which will al­low the com­pa­ny to avoid pros­e­cu­tion un­der the For­eign Cor­rupt Prac­tices Act if it fol­lows cer­tain terms.he res­o­lu­tion of these mat­ters and the clo­sure of this re­gret­ful sit­u­a­tion.” The com­pa­ny said it has co­op­er­at­ed with au­thor­i­ties and has made “sig­nif­i­cant up­grades” to its “risk, le­gal and com­pli­ance con­trols.”

Fed­er­al pros­e­cu­tors al­so un­sealed a 2022 guilty plea by Vikas Sagar, a for­mer se­nior part­ner at McK­in­sey who worked in the sub­sidiary’s South Africa of­fice.

Sagar, 56, of Jo­han­nes­burg, plead­ed guilty in U.S. Dis­trict Court for the South­ern Dis­trict of New York, to one count of con­spir­a­cy to vi­o­late the For­eign Cor­rupt Prac­tices Act.

The sub­sidiary, McK­in­sey Africa, paid bribes to of­fi­cials at two state-con­trolled util­i­ty com­pa­nies in South Africa be­tween 2012 and 2016 to ob­tain non-pub­lic in­for­ma­tion on bids for con­sult­ing con­tracts. The pur­pose was to se­cure lu­cra­tive con­sult­ing con­tracts, the DOJ said in a press re­lease.

Pros­e­cu­tors said McK­in­sey Africa ob­tained con­fi­den­tial in­for­ma­tion from the two com­pa­nies, Transnet SOC Ltd. and Es­kom Hold­ings SOC Ltd., about the con­tracts dur­ing the bid­ding process.

Then it sub­mit­ted mul­ti­mil­lion-dol­lar con­sult­ing en­gage­ment pro­pos­als, know­ing that oth­er South African con­sult­ing firms it had part­nered with would pay part of their fees as bribes to Transnet and Es­kom of­fi­cials, the US De­part­ment of Jus­tice said.

The bribery scheme helped McK­in­sey and McK­in­sey Africa net ap­prox­i­mate­ly US$85 mil­lion in prof­its, ac­cord­ing to pros­e­cu­tors.

McK­in­sey Africa has en­tered in­to a three-year de­ferred pros­e­cu­tion agree­ment with the DOJ re­lat­ed to a crim­i­nal charg­ing doc­u­ment, called an in­for­ma­tion, charg­ing McK­in­sey Africa with one count of con­spir­a­cy to vi­o­late the an­ti-bribery pro­vi­sions of the FC­PA, pros­e­cu­tors said.

The de­ferred pros­e­cu­tion agree­ment re­quires McK­in­sey Africa to ac­cept re­spon­si­bil­i­ty for the al­le­ga­tions.

“McK­in­sey Africa en­gaged in a se­ri­ous and long-run­ning bribery scheme to se­cure con­tracts by cor­rupt­ing gov­ern­ment of­fi­cials,” Chad Yarbrough, as­sis­tant di­rec­tor of the FBI Crim­i­nal In­ves­tiga­tive Di­vi­sion, said in the press re­lease.

“This mis­con­duct is a bla­tant vi­o­la­tion of law and a breach of pub­lic trust. No mat­ter what coun­try the crime oc­curs in, the FBI will al­ways work close­ly with our in­ter­na­tion­al part­ners to root out cor­rup­tion,” said Yarbough.

“McK­in­sey wel­comes the res­o­lu­tion of these mat­ters and the clo­sure of this re­gret­ful sit­u­a­tion,” McK­in­sey Africa said in a state­ment Thurs­day.

“McK­in­sey is a very dif­fer­ent firm to­day than when these mat­ters first took place,” the sub­sidiary said, adding, “We fired Mr. Sagar soon af­ter learn­ing of these is­sues, re­turned our fees with in­ter­est, co­op­er­at­ed with the au­thor­i­ties, and made sig­nif­i­cant up­grades to our risk, le­gal, and com­pli­ance con­trols to en­sure McK­in­sey sets the stan­dard across our pro­fes­sion.”

South African fed­er­al pros­e­cu­tors worked with the Jus­tice De­part­ment to co­or­di­nate the res­o­lu­tion.

McK­in­sey is a Chica­go-based multi­na­tion­al con­sult­ing firm that was found­ed in 1926 and pro­vides pro­fes­sion­al con­sult­ing ser­vices to gov­ern­ments, cor­po­ra­tions and oth­er or­gan­i­sa­tions.

“McK­in­sey is a very dif­fer­ent firm to­day than when these mat­ters first took place,” the com­pa­ny said.

(Var­i­ous)