Eskom paid the consultancies more than R1.6bn in “risk-based” fees for just six months’ work on a contract that, it is now crystal-clear, should never have been signed. Legalities apart, it’s hard to see where Eskom made any of the savings that supposedly justified the enormous success-based fees that it paid McKinsey and Trillian.
If SA had halfway decent law-enforcement authorities, they would already have launched criminal proceedings — against those responsible at Trillian and McKinsey but also, crucially, at Eskom. At least seven top Eskom executives have been implicated including (now suspended) acting CEO Matshela Koko and chief financial officer Anoj Singh. They must be held to account and charged, and if they are guilty, they too should be paying back money. McKinsey has tried very hard to stay under the radar, but its exotic billing methods have now, it seems, been outed for what they are and the firm owes its clients and the public some answers, in SA and internationally.
The consultancy’s reputation and global standing may now be just as much at risk as those of audit firm KPMG, and appropriately so. When a consultancy charges fees based on its success in achieving savings for the client, it’s no doubt far too easy to specify the measures of success in ways that ensure rich pickings for the consultants, in this case including Trillian, which claimed to be McKinsey’s black-empowerment supplier but was neither black nor legally a supplier.
Legalities apart, it’s hard to see where Eskom made any of the savings that supposedly justified the enormous success-based fees that it paid McKinsey and Trillian.
Eskom executives do not seem to understand the concepts of sound governance and ethical behaviour. It is time that a strong, non-nonsense and trustworthy CEO is appointed who can give direction by leading from the front.