Read the report here<\/a><\/span>.<\/strong><\/p><\/blockquote>\n The report details how McKinsey agreed to subcontract 30% of their Eskom work to Trillian under the guise of \u201csupplier development\u201d, a programme intended to upskill small, black-owned business.<\/p>\n Instead documents from Budlender\u2019s report as well as in the #GuptaLeaks show that Trillian planned to siphon huge chunks of the money it received to a company part-owned by the Guptas and another company in Dubai.<\/p>\n According to Budlender, evidence suggests that \u201cthe Supplier Development Programme was, at least from the point of view of some senior McKinsey representatives, a sham.<\/p>\n The Eskom contract price included 30% for Trillian, which from those representatives’ point of view served little purpose other than to provide a substantial financial benefit to Trillian and its shareholders – and presumably induce Eskom to award the contract to McKinsey.\u201d<\/p>\n McKinsey appears to have been willing to look the other way provided they secured a lucrative contract from Eskom.<\/p>\n In June 2015 Eskom was in chaos. Brian Molefe had just become the third acting CEO in just over a year and load-shedding was once again on the cards.<\/p>\n In the midst of this, Eskom decided to negotiate a \u201crisk-based contract\u201d with consulting firm McKinsey to assist with Eskom\u2019s turnaround strategy.<\/p>\n The proposed Master Services Agreement would see McKinsey providing advice to Eskom on everything from buying coal and running power plants to settling insurance claims. In turn McKinsey agreed to subcontract 30% of the work to Trillian.<\/p>\n By early 2016 there were problems.<\/p>\n In an internal memo written in February 2016 and included in Budlender\u2019s report, a former Trillian executive described the open contempt that McKinsey\u2019s senior executives showed towards Trillian, calling the partnership \u201cone of exclusion\u201d.<\/p>\n \u201cThere is a general theme emanating from the McKinsey leadership down, that Trillian \u2026 is simply a necessary, but unwanted piece of baggage in the awarded contract,\u201d the former executive wrote in the memo.<\/p>\n \u201cThere is a perception that TMC [Trillian Management Consulting] is only around for the \u201c30%\u201d and will not actually contribute to delivery.\u201d<\/p>\n According to the former executive, McKinsey\u2019s whole attitude to supplier development was \u201cit doesn\u2019t really matter as long as you get your percentage.\u201d<\/p>\n To the former executive\u2019s credit, she appears to have pushed back, insisting that TMC staff be included by McKinsey in the work at Eskom. However, the memo also provides a rare insight into how McKinsey viewed their partnership with Trillian.<\/p>\n At a one-on-one meeting between the former executive and Lorenz J\u00fcngling, the McKinsey partner was frank: \u201c[T]he current McKinsey sentiment is that TMC is not motivated by delivery and growth towards independence, but rather in this partnership purely to receive revenue in return for not much work,\u201d J\u00fcngling reportedly said.<\/p>\n Like Trillian, McKinsey has refused to co-operate with Budlender\u2019s inquiry. In fact, when McKinsey\u2019s Benedict Phiri was approached, he denied that McKinsey had ever partnered with Trillian, saying: \u201cMcKinsey did not work on any projects on which Trillian worked as an SDP or a subcontractor to McKinsey.\u201d<\/p>\n When Budlender pointed him to a letter from McKinsey executives that directly contradicted this, Phiri shut down.<\/p>\n \u201cMcKinsey’s position is that, in light of the informal nature of your inquiry in the context of various legal and regulatory processes around Trillian, it is inappropriate to furnish any further comment,\u201d Phiri told Budlender in an email earlier this week.<\/p>\n AmaBhungane sent a copy of Budlender\u2019s report to McKinsey on Thursday. McKinsey\u2019s Bonita Dordel responded saying: \u201cWe continue to investigate this matter and are reviewing Advocate Budlender\u2019s report. We will respond appropriately in due course.\u201d<\/p>\n The #GuptaLeaks show that starting in mid-2015, a Sahara Systems subsidiary called Cutting Edge Commerce was discussing the \u201cMcKenzie (Eskom) Project\u201d during monthly meetings and how Cutting Edge could profit from the contract.<\/p>\n Run by Althaf Emmamally, another lieutenant in the Gupta empire, Cutting Edge specialises in providing software to improve procurement processes. At the time, 52% of the company was owned by the Gupta\u2019s Sahara Systems and the #GuptaLeaks show it was run as part of the Sahara Systems group.<\/p>\n Leaked documents obtained by AmaBhungane shows that TMC planned to pay a set 80% fee of every rand they earned from the Procurement work stream at Eskom to Cutting Edge \u2013 minutes from October 2015 show that Cutting Edge anticipated this arrangement would make them R1.3-million a month, and thereafter R20-million every quarter.<\/p>\n Trillian declined to confirm how much Cutting Edge has been paid but confirmed it subcontracted some Eskom work to the Gupta-owned company. \u201cMcKinsey took the lead on the overall programme, with TMC in the supplier development role, providing local consultants to support the team.<\/p>\n “TMC in turned partnered with Cutting Edge Commerce \u2013 a BEE level 2 company [and] specialists in Procurement and SAP,\u201d Trillian said in a written statement on Friday afternoon.<\/p>\n But Cutting Edge was not Trillian\u2019s only preferred partner.<\/p>\n In January 2016, a new company entered the deal. E Gateway Consulting is registered to a PO box address in the Umm Al Quwain Free Zone, a tax and secrecy haven bordering Dubai.<\/p>\n There is no trace of the company online, but Trillian says: \u201cIt\u2019s Trillian\u2019s understanding that E-Gateway India set up the E-Gateway FZC office in Dubai to service their energy clients in the Middle East.\u201d<\/p>\n According to a second former executive that Budlender interviewed, E Gateway was introduced to Trillian staff by Clive Angel, a director of Integrated Capital, a company with close Trillian links, and told that E Gateway would be the preferred partner for the Eskom Generation work stream.<\/p>\n \u201cMr Angel said to [the former executive] \u2018Our boss has found them, and we will work with them\u2019. [The former executive] understood the reference to the \u2018boss\u2019 as a reference to Mr. Essa,\u201d Budlender\u2019s report notes.<\/p>\n According to the signed contract with E Gateway, annexed to Budlender\u2019s report, 77% of all revenue that TMC received from Eskom on the Generation work stream would flow to E Gateway.<\/p>\n At this stage, Trillian still did not even have a signed agreement with McKinsey. Despite this TMC had already agreed to divert a large portion \u2013 understood to be in excess of R10-million a month \u2013 to a foreign company.<\/p>\n According to Trillian, E Gateway added value: \u201cE-Gateway were required to assist with technical solutions to help increase the Energy Availability Factor (EAF) of the power station. They have global technical expertise as energy experts in fossil fuel power stations and enable us to better understand the technical intricacies of the client and improve efficiencies,\u201d Trillian said.<\/p>\n It added that after the contract has since been renegotiated and no payments have been made to E Gateway to date.<\/p>\n It appears the introduction of E Gateway did not sit comfortably with McKinsey though. In a confidential letter in March, the chair of McKinsey\u2019s risk committee asked Trillian to provide them with detailed information about the exact nature of the relationship between Trillian and E Gateway.<\/p>\n AmaBhungane put it to Trillian that subcontracting 77% and 80% the work to other companies, including a foreign company, made a mockery of Eskom\u2019s supplier development programme.<\/p>\n Trillian, which now describes itself as \u201ca consortium\u201d, says the company still believes in supplier development, adding that \u201cit is and has always been Trillian\u2019s vision to be a firm in the league of global consultancies.\u201d<\/p>\n By February 2016, the McKinsey-Trillian partnership was on the rocks.<\/p>\n On February 9, McKinsey director Vikas Sagar sent a letter to Eskom, giving McKinsey\u2019s blessing for Eskom to start paying Trillian directly, instead of via McKinsey, as a subcontractor. It\u2019s not clear what prompted Sagar\u2019s letter \u2013 this was one of the questions Budlender put to McKinsey that they refused to answer.<\/p>\n From the #GuptaLeaks we know that Sagar already had a connection Essa. In 2014, Sagar asked a McKinsey expert for an opinion on the viability of a uranium and gold mine in South Africa. Sagar forwarded the expert opinion to his private email address and then sent it on to Essa<\/a>.<\/p>\n By March, McKinsey\u2019s risk committee had decided that they could not go ahead with the Trillian partnership after all. Sources told amaBhungane that after McKinsey dropped Trillian, Eskom\u2019s interest in McKinsey also faded.<\/p>\n \u201cAfter review of the contract that included queries to the contractor, [chief financial officer Anoj] Singh suggested cancellation of the contract to the Board during the first half of 2016,\u201d Eskom spokesperson Khulu Phasiwe said in a written statement last night.<\/p>\n Although the 6-month arranged marriage between McKinsey and Trillian had now come to an end, Trillian appears to have continued working for Eskom and invoicing them under the guise of a contract that no longer existed.<\/p>\n As amaBhungane has previously reported, over the next 11 months, Trillian submitted invoices to Eskom totalling at least R419-million.<\/p>\n![](\"http:\/\/cdn.mg.co.za\/content\/documents\/2017\/06\/30\/screenshot2017-06-30at112557.png\")
<\/p>\nHow McKinsey opened the door<\/h5>\n
Enter the Guptas<\/h5>\n
Trillian starts cashing in<\/h5>\n