Business Maverick

Deloitte Dragged Into South African State Corruption Scandals

By Bloomberg 22 October 2019
Caption
The Eskom Holdings SOC Ltd. Megawatt Park headquarters office stands in Johannesburg, South Africa. Photographer: Waldo Swiegers/Bloomberg

Deloitte LLP has become the latest international company dragged into South Africa’s government-linked corruption scandals.

State-owned power utility Eskom Holdings SOC Ltd. said on Monday that it wants the accountancy and advisory firm to return 208 million rand ($14 million) that it alleges were overpriced contracts.The contracts were awarded during the tenure of former Chief Financial Officer Anoj Singh and ex-senior executive Prish Govender. Both have been tied to corruption probes at the utility. They deny wrongdoing.

“Deloitte was granted contracts when their prices were five times higher than those of their competitors,” said Jabu Mabuza, Eskom’s acting chief executive officer, in a statement. Correct procedures were not followed and in some cases proposals were submitted before tenders had been announced, he said.

Deloitte disputed the allegations saying its been in talks with Eskom for “some time” over the matter and had explained the processes that were followed.

“Deloitte Consulting therefore disagrees with and disputes the allegations made by Eskom,” the company said in a statement. “While Deloitte Consulting is disappointed by this recent development, we welcome the opportunity to put our version and the facts of the matter before a court.”

McKinsey & Co agreed to return money to Eskom after a dispute over the legality of its contract. Bain & Co. has returned money to the South African Revenue Service over an improperly awarded contract and KPMG LLP has apologized for poor quality work that led to the departure of key revenue service officials.

Gartner Inc. is in talks with the revenue service over a contract the agency says was improperly awarded and SAP SE suspended executives after a probe found it paid about $11 million in commissions to secure contracts with Eskom and state ports and rail company Transnet SOC Ltd.

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