03/10/2017 06:15 SAST | Updated 03/10/2017 06:15 SAST

McKinsey Had Concerns About Trillian's 'Transparency' Issues

The consultancy firm wrote to Eskom, saying working with Trillian carried reputational risks.

Arnd Wiegmann / Reuters

In the latest revelation about Eskom's controversial contract with Gupta-linked firm Trillian, Bloomberg reported that the power utility was warned by consultancy firm McKinsey about potential problems with working with Trillian. McKinsey reportedly said it had concerns about Trillian's "transparency" and was worried about the reputational risk attached with working with it.

McKinsey was hired as a consultant by Eskom, and had to take on a supplier development partner in order to keep the contract, Bloomberg reported. It chose Trillian, formerly owned by Gupta associate Salim Essa. Essa sold his shares in Trillian in July.

Letters seen by Bloomberg reportedly show how the company wrote to Eskom in March 2016 to Eskom's no suspended chief financial officer, Anoj Singh, saying it would stop working with Trillian because of the potential reputational risks involved. McKinsey executives reportedly said they were concerned about potential conflicts of interests and Trillian's shareholders.

McKinsey reportedly asked Trillian about its ownership but the firm was only partially open about this.

Despite this, Eskom continued to pay Trillian.

Meanwhile, a source told Bloomberg that McKinsey earned R70-million by the time it had stopped working with Trillian, while Trillian had earned R30-million. McKinsey reportedly earned R900-million for meeting performance targets, nearly twice as much as Eskom previously said.

On Monday, Business Day reported that Eskom had ignored the advice of law firm Bowmans, who recommended that several officials be charged and disciplined for their role in the McKinsey/Trillian affair.

Eskom told Bloomberg it was looking into these issues, while Trillian said it was not aware of McKinsey's concerns.