Vikas Sagar, named as the McKinsey SA linchpin in corrupt deals at Transnet, Eskom and SAA, now has a high-powered role as the co-founder of Kalido, a London-based tech start-up which has secured millions of US dollars in venture capital funding.
Three McKinsey executives appeared before the Zondo Commission of Inquiry into State Capture this week and the firm also agreed to repay R650-million to Transnet and SAA after refunding R1-billion to Eskom in 2018.
McKinsey senior partner Jean-Christophe Mieszala said Sagar, who led the South Africa office when the dodgy deals were done, had been reported to authorities and fired by the firm for breach of his “professional conduct and professional standards. We had concerns and suspicions (enough) to report (him) to authorities and terminate his employment,” said Mieszala.
The commission heard evidence of how Sagar had colluded with the Gupta family lieutenant and state capture strategist Salim Essa to sign a supplier development contract between McKinsey and Regiments, and later with Trillian management consultants.
This contract was the conduit for Essa and the Guptas to extract and launder multimillions of rands in kickbacks from Transnet, Eskom and SAA.
Mieszala revealed that Sagar had illegally wiped his McKinsey computer clean of evidence once it started an internal investigation and the commission’s investigators also showed the company that he had moved his communications with Essa to private email, which is a red flag for fraud.
The information given to McKinsey by the commission prompted the company to agree to refund R650-million in fees to Transnet and Mieszala said that it had not ruled out returning the interest too, he told Judge Zondo on 10 December. (For the details of the refund, see here.)
Sagar has landed on his feet. He now works in London as co-founder of Kalido, named as a World Economic Forum Tech Pioneer for 2020. Started in South Africa, the company runs an app of the same name which matches talent to projects in the growing gig economy. It has won millions of dollars in start-up funding from venture capital funders excited by its offering.
Its corporate documents say Kalido was co-founded by Sanjay Varma — who was Alibaba’s number three executive — and by Sagar, who still trumpets being an “ex-Senior Partner McKinsey” as part of his new calling card. Part of Kalido’s strategy is to take on LinkedIn, which charges a hefty fee and is Western in its positioning. “Kalido is for everyone. The basic use and availability will always be free … We consciously encourage participation from everyone, and actively seek different cultural and social perspectives,” says the company brochure. It’s a good schtick, but Kalido fails to mention that McKinsey fired its co-founder after being caught in serious corruption in South Africa.
“Kalido originated in South Africa, with our co-founders having ties to the country. We have people across the UK where we are headquartered, Hong Kong, India and we have a large proportion of our resource we tender via a development agency in South Africa,” Greg Atkinson, Kalido’s head of marketing, told Daily Maverick.
He did not respond to a request for comment on whether it would investigate the new revelations about Sagar by the Zondo Commission of Inquiry.
“Sagar sought to use Essa to advance McKinsey’s interests at Transnet (even as he) would have known what was going on at Transnet,” said evidence leader Matthew Chaskalson. He said that Sagar had also met with Iqbal Sharma who sat on the Transnet board and who introduced Essa to Transnet. Chaskalson revealed that kickback schedules, allegedly drawn up by Regiment and (later) Trillian boss Eric Wood, had been emailed to successive chief financial officers at Transnet.
He said that evidence collected by the commission showed that Essa had been paid 50% of all fees earned by Regiments as part of the McKinsey deal and that these had been paid to a succession of his shell companies used to collect his payola.
Mieszala said that McKinsey had tightened up a number of its systems as a result of what had happened in South Africa, including sole-source contracts, open fee risk-based contracts and how executives communicated with clients. McKinsey will no longer work at South African state-owned companies and any contracts with South Africa must now be approved globally.
“We are now much more vigilant, almost paranoid,” said Mieszala. McKinsey senior partner David Fine said he had asked National Treasury contacts whether Mohamed Bobat (appointed by Trillian as an adviser to ‘Weekend Special’ former finance minister Des van Rooyen in 2015) was a Gupta connection. “The answer was ‘yes’,” Fine told Zondo in his evidence.
“It raised my concerns, and I asked for due diligence to be conducted (into McKinsey’s relationship with Regiments/Trillian). The firm decided to terminate the relationship and soon after started disciplinary action against Sagar who first said he would appeal his axing but then later quit McKinsey in 2017. Fine said the firm had inserted immediate termination clauses into its supplier development contracts.
Chaskalson said that McKinsey was the only company which had repaid earnings from State Capture, that it had cooperated fully with the commission and that it terminated its contracts with Regiments and Trillian on probity grounds. DM
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