McKinsey bleeds two bank clients – report

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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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