Eskom vs McKinsey contract debacle explained

Eskom has reversed its position on the contract with McKinsey, saying there was never anything wrong with the contract in the first place.

Questions were raised after R1.6 billion was paid to McKinsey and Trillion by Eskom.

Eskom says the contract was above board but it still wants McKinsey to pay back the money.

Investigative journalist at Business Day and Financial Mail, Stephan Hofstatter says the only explanation he could come up with for the sudden U-turn is that Eskom executives are "trying to save their own bacon".

He says this move appears to be a desperate attempt by Eskom executives to avoid being held criminally liable for paying McKinsey and Trillian R1.6 billion without a proper contract.

Read: Trillian and McKinsey are finally going to face the music - Vavi

McKinsey has a long relationship with Eskom...

Stephan Hofstatter, Investigative Journalist at Business Day and Financial Mail

He says it seems McKinsey approached Eskom with a proposal that was going to save the power utility a great of money and wanted it to pay them some percentage of the savings.

The contract with McKinsey somehow included bringing along a Gupta-linked company Trillion, adds Hofstatter.

They sat down and divided the earnings between McKinsey and Trillian and came up with a projected R9.3 billion earning within 3 years. Fortunately the contract was stopped after only 1.6 billion was paid.

Stephan Hofstatter, Investigative Journalist at Business Day and Financial Mail

Even with that R1.6 billion that was paid, there was absolutely no justification for signing the contract because it was supposed to get authorisation from Treasury and it did not get it. In addition, there was no contract between Trillian and McKinsey or between Trillian and Eskom, and besides that, they were paid R600 million without a contract.

Stephan Hofstatter, Investigative Journalist at Business Day and Financial Mail

To hear more of this explanation of the contract between McKinsey and Eskom, listen below:


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