Two recent stories about massive failures in South Africa by U.S.-based consultancies—Bain Capital and McKinsey—paint them as somewhat unwitting victims of the corrupt government of former South Africa President Jacob Zuma.
Here’s the opening from the New York Times’s excellent piece on McKinsey’s decision to work with Eksom, the state-owned company that provides electricity to South Africa:
JOHANNESBURG — The blackouts kept coming. The state-owned power company, Eskom, was on the verge of insolvency. Maintenance was being deferred. And a major boiler exploded, threatening the national grid.
McKinsey & Company, the godfather of management consulting, thought it could help, but was not sure that it should, according to people involved in the debate. The risk was huge. Could McKinsey fix the problems? Would it get paid? Would it be tainted by South Africa’s rampant political corruption?
In late 2015, over objections from at least three influential McKinsey partners, the firm decided the risk was worth taking and signed on to what would become its biggest contract ever in Africa, with a potential value of $700 million.
In his memoir of his time in South Africa, “How To Steal A Country: State Capture and Hopes for The Future in South Africa,” former British Ambassador to South Africa Robin Renwick portrays McKinsey and other global consultancies as willing participants in Zuma’s corrupt looting of the country.
The Times’ piece on Bain does provide a little of this context:
Whatever the government’s motives, the testimony from Bain officials provided an unusual look at corruption in South Africa in recent years and the role played by globally prestigious companies like Bain, KPMG and McKinsey.
In 2015, for example, the consulting firm KPMG produced a report repeating claims, later found to be false, that criminal investigators at the tax agency had been illegally operating a “rogue unit.” These claims were used to justify purges of senior staff members. Gartner, another American consulting firm, received an $11 million contract to review the tax agency’s information systems.
“There is a whole set of conflicts of interest and unhealthy relationships between governments and companies willing to rubber stamp them,” said Alex Cobham, chief executive of the Tax Justice Network, a British organization.
“Sometimes you’re providing cover for a decision that’s already been taken.”
Facing withering criticism of their conduct in South Africa, some consulting firms have offered to return their multimillion-dollar fees. But Bain indicated on Sunday that it had no plans to do so.
Bain isn’t mentioned in Renwick’s book, but McKinsey is along with KPMG and the now-defunct global PR firm Bell Pottinger, which collapsed when its corrupt dealings in South Africa became known.
The story of Zuma’s corrupt reign is a familiar one, as is the willingness of consultancies like Bain and McKinsey to knowingly feed at the trough: profits over people, no values or guiding principles beyond profit, and amorality.