February 22, 2018 / 5:07 PM / 10 months ago

Harvard students learn from McKinsey scandal in South Africa

LONDON (Reuters) - An ill-fated deal struck by global consultancy McKinsey in South Africa has been used by Harvard Business School as a case study for students.

FILE PHOTO: The logo of consulting firm McKinsey & Company is seen at an office building in Zurich, Switzerland September 22, 2016. REUTERS/Arnd Wiegmann/File Photo

McKinsey had a local management consultancy, Trillian, as a partner when working on a big contract to advise South African state utility Eskom. The deal collapsed because of corruption allegations that have damaged McKinsey’s reputation.

Trillian was controlled at the time by friends of Jacob Zuma, who was then South Africa’s president. McKinsey denies it knowingly let funds from Eskom be diverted to a firm controlled by Zuma allies as a way to secure the contract.

The case study, seen by Reuters and dated Jan. 7, 2018, asks students at the elite business school in the U.S. city of Boston to imagine they are a McKinsey employee deciding whether to partner with Trillian to win a contract with Eskom.

It explains that McKinsey could have a better chance of winning the contract if Trillian is given a percentage of the deal.

“Would you bring in Trillian for the proposal to Eskom? How would you come to your decision? What additional information would you request?” the case study asks.

One scribbled note on the paper says “blow the whistle”. It is not clear whether a student or a staff member wrote this.

A spokesman for McKinsey declined comment on the case study.

Jim Aisner, a spokesman for Harvard Business School, said it was part of a course called: “Africa Rising: Understanding Business, Entrepreneurship, and the Complexities of a Continent.”

“The primary goal of this exercise was to place students in the protagonist role so that they could understand the complicated issues facing senior management in South Africa,” Aisner said in an emailed response to questions.

The scenario highlights the attention the case has attracted in the United States, where McKinsey is based.

McKinsey, the world’s largest management consultancy, said last year it was “embarrassed” by errors it made in working at Eskom alongside Trillian, but denied it did anything illegal and said it would pay back its fee.

Editing by Timothy Heritage

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