McKinsey will pay back to South Africa the billion rand it was paid by Eskom, MPs heard on Wednesday.
David Fine, a senior partner at the global management consultancy's London office, told the parliamentary inquiry into state capture that McKinsey did not want "tainted" money.
He said the company had entered into a relationship with Eskom in good faith, not realising the contract it had secured with the utility did not have Treasury approval.
"Eskom said it had treasury approval. It did not. Eskom lied to McKinsey," Fine said.
The validity of the contract is currently being reviewed by the High Court, and the parliamentary inquiry is being conducted by the National Assembly's public enterprises portfolio committee.
Fine said Eskom had written to McKinsey and asked for the money to be returned.
"But if the courts... decide that McKinsey's contract is valid and we are entitled to that money, McKinsey will still give that money back to South Africa," he said.
"But it's not because there is guilt associated with anything we've done. I am not aware of anything we should be guilty of. The reason we will give that money back... is the contract didn't have the Treasury approval. It didn't have the requisite approval in place, and we don't feel we should keep that money."
Fine conceded that his company's vetting process had failed when it came to its relationship with Trillian.
"We applied it [the vetting] too late," he said in response to questions.
He said that although McKinsey had worked alongside Trillian for a few months at Eskom, "we never had a contract with Trillian".
The due diligence process on the relationship with Trillian and its parent company, Regiments Capital, was completed in March 2016, at which point McKinsey ended its relationship with the companies.
Regarding Trillian, Fine said his company had not been careful enough about whom it associated itself with.
"Had we known that Trillian was owned by Mr. Salim Essa, widely believed to be a business associate of the Gupta family... we would not have worked with him."
Fine told the inquiry he was ashamed his firm had been linked with state capture.
"I regret that we did not move even more quickly when media reported potential links between Trillian and the Gupta family in 2016."