With a request from the National Prosecuting Authority (NPA), South Africa’s Pretoria High Court has given a freezing injunction on Mckinsey and local consultancy Trillian assets worth $130 million, pending the outcome of investigations on the state-owned Gupta scandal.
South Africa’s wealthy Gupta family has been at the center of the country’s corruption investigations with the accusation of using their friendship with President Jacob Zuma to win government contracts. Denying the wrongdoing, the Guptas and Zuma said they are victims of a politically motivated witch-hunt. It’s the latest move amid allegations of financial scandal that have swept the country in years.
The amount of the frozen assets is equivalent to the 1.6 billion rand fees earned by McKinsey and local consultancy Trillian while advising South African power utility Eskom and Transnet Company in 2016 that are linked to the Gupta brothers.
According to an NPA source who pled anonymity “The NPA as at December 2017 had obtained a preservation order from the Pretoria High Court to preserve assets worth around 1.6 billion rand relating to Trillian and McKinsey”.
NPA spokesperson Luvuyo Mfaku said that “They have 90 days to indicate whether they are defending the matter. If they do, the onus is on them to satisfy the court that they acquired [the assets] through lawful means,” adding that “If they prove that they acquired it legally, it will be unfrozen and go back to them. If they fail to prove they are the lawful owners, after 90 days the NPA will apply for a forfeiture order.”
The order that permits prosecutors to freeze assets while awaiting the outcome of the investigation would be served to parties involved in the case on Tuesday, noted the NPA source.
Despite President Zuma’s recent agreement to set up a commission of enquiry into allegations of influence peddling by the Gupta brothers, Ajay, Atul and Rajesh who South Africa’s anti-corruption watchdog accuses of siphoning off public funds, the South African parliament is investigating whether McKinsey shrewdly gave room for the funds diversion from Eskom to Trillian as a way of securing the contract.
Commenting on the order, a spokesman from Mckinsey noted in an email to Reuters that “As we have said before … we will return the fee we earned from the Eskom turnaround programme (R1.028bn) no matter what,” adding that “Mckinsey will cooperate with South African authorities in their investigations into the case”.
The World-known management consultancy has already lost several clients over the contract since investigation revealed its involvement in the Gupta’s financial scandal.
Tangled also with the scandal is the financial services firm KPMG, that has lost clients after it announced a major shakeup in leadership following an internal investigation of its practices while doing work for the Gupta family. KPMG said its investigation found no evidence of corruption or illegal behavior but identified “work that fell considerably short of it’s standards.
Report has it that the South Africa’s Directorate for Priority Crime Investigation (DPCI) has been given an arrest warrant for at least one Gupta brother and a number of the family’s associates; waiting for the prosecutors at the NPA to sign the warrants.