Coke pushes back on McKinsey after South Africa scandal

The South Africa arm of Coca-Cola has become the first major non-bank business to publicly stop working with McKinsey after the consultancy became embroiled in a vast political scandal in the country.

The world’s largest maker of soft drinks told the Financial Times that both Coca-Cola South Africa and its bottling company Coca-Cola Beverages South Africa will not contract any future work with McKinsey “until external investigations into potential corruption have been completed”.

The move will come as a significant blow to McKinsey, the world’s largest consulting firm which has struggled to draw a line under its reputational blow in South Africa.

McKinsey has apologised for making “several errors of judgment” in its work with Trillian Capital, a local consultancy that was until recently owned by an associate of the politically controversial billionaire Gupta family.

Trillian has been accused by civil society groups of siphoning hundreds of millions of rand from Eskom, a state-owned power utility. It has denied the claims. An investigation by McKinsey found no evidence of corruption or bribery but it admitted that it should not have worked with Trillian until after due diligence.

The Gupta family has been accused of using ties to Jacob Zuma, South Africa’s president, to influence state contracts and appointments to favour its business interests. The Guptas and Mr Zuma deny the claims.

Sasol, the Johannesburg-listed energy company, separately told the FT it has decided to halt new work with McKinsey in response to concerns about the consultancy’s work in South Africa that came under intense public scrutiny last year.

A spokesperson for Sasol said: “Following the allegations levelled against McKinsey, Sasol decided to have no new engagements with McKinsey. McKinsey is currently only consulting on projects it had been involved with prior to this decision.”

McKinsey declined to comment on Coca-Cola and Sasol’s statements.

The only other large companies to have taken action in response to the scandal are Nedbank, Standard Bank and Barclays Africa, three of South Africa’s largest lenders. The banks had cut ties with McKinsey in November.

Iraj Abedian, chief executive of Pan-African Research, said Mr Zuma’s long-awaited decision this week to set up a judicial inquiry into claims of state looting under his presidency would intensify pressure on McKinsey.

“It makes perfect sense for Coca-Cola and all other major corporates to cut ties with McKinsey,” he said.

With the launch of the new inquiry, public pressure would mount against all those who keep doing business with companies linked to the corruption scandal, he added.