When Your Company Inherits Someone Else’s Corruption
JGL Forensic Services
Two multinational companies have paid South Africa more than R7 billion to make its biggest corporate corruption cases go away.
A court might now order some of that money handed back.
The challenge putting that arrangement at risk does not come from a whistleblower or a corruption watchdog. It comes from one of the men the money was meant to help hold accountable.
Matshela Koko, the former acting chief executive of Eskom, is asking the Gauteng High Court to set aside the R2.5 billion settlement the National Prosecuting Authority struck with ABB in December 2022. That settlement let the Swiss-Swedish engineering firm avoid a criminal trial over bribery at the Kusile power station.
The matter was heard over two days on 20 and 21 April this year. No ruling has been handed down.
In his own court papers, Koko writes that “guaranteed immunity from criminal prosecution is not provided in South African law.”
ABB disagrees. Its lawyer in the matter, Deidre Simaan, told the court the settlement amounted to “a valid exercise of prosecutorial discretion,” not a loophole.
Both sides have an obvious interest in how this gets framed. Koko is also fighting separate corruption charges over the same R2.2 billion Kusile tender, charges prosecutors have said they intend to revive after the case was struck off the roll in 2023 over delays.
The NPA has accused him publicly of using this application to escape those charges entirely, not out of any principled concern for the rule of law.
What the Documents Show
Strip away the legal argument and the documents tell a fairly simple financial story.
ABB admitted to the United States Department of Justice that it bribed a senior Eskom official to win the R2.2 billion Kusile contract in 2015, a project that was already years behind schedule and billions over budget before the bribery came to light.
Working with investigators in the US, Switzerland, Italy and Germany, South African prosecutors built a case strong enough that ABB agreed to repay roughly R1.6 billion to Eskom in 2020 over a related overpayment dispute, then a further R2.5 billion in punitive reparations under section 64(e) of the Prevention of Organised Crime Act in December 2022.
That second payment, in ABB’s own court papers, comes to a precise R2,562,555,000.
Section 64(e) is the legal mechanism behind all of this. It lets the prosecuting authority’s Investigating Directorate Against Corruption, known until recently simply as the ID, settle with a company instead of taking it to trial.
The company admits responsibility, pays into the state’s Criminal Asset Recovery Account, and hands over evidence. It works a little like the deferred prosecution agreements the US Department of Justice uses in Foreign Corrupt Practices Act cases, and South African prosecutors have increasingly leaned on American enforcement to do some of the heavy lifting.
What the agreement does not do is protect any individual involved. Directors, employees and contractors can still be prosecuted on their own, which is exactly Koko’s position.
McKinsey’s settlement followed the same playbook, on a longer timeline.
A former senior partner, Vikas Sagar, ran a bribery scheme between 2012 and 2016 to win consulting contracts with Transnet and Eskom, funnelling a share of the fees to officials at both companies through local partners.
McKinsey first committed in 2017 to repay roughly R1 billion to Eskom, then agreed in 2021 to repay close to R870 million to Transnet. The case only closed in December 2024, when McKinsey Africa signed a deferred prosecution agreement with the US Department of Justice, paying a $123 million penalty, while the NPA separately collected R1.1 billion into the Criminal Asset Recovery Account.
Add it up and the two companies have moved more than R7 billion out of their accounts since 2017.
Not all of it went to the same place. The punitive components, R2.5 billion from ABB and R1.1 billion from McKinsey, landed in the Criminal Asset Recovery Account. The rest went directly to Eskom and Transnet as repayment of fees and overpayments.
This year’s State of the Nation address put the wider picture at R14.18 billion in assets frozen across 34 active corruption cases involving more than 200 accused, naming both companies directly.
Who Benefits, Who Pays
A settlement like this works well for everyone at the table, which is part of why Koko’s challenge matters.
The company avoids a trial it might lose badly, or might never lose at all given how hard South African law makes it to convict a corporate entity. The state avoids years of litigation and banks a guaranteed recovery instead of gambling on a verdict.
The individuals who actually took or arranged the bribes are not covered by any of it. They remain exposed, on their own, which is precisely what Koko is contesting from inside that exposure.
What gets less attention is who carries the risk if a settlement unravels.
Simaan told the court that if the ABB agreement is set aside, the state may be legally obliged to repay the R2.5 billion it has already banked and spent. Nobody involved in the case wants that outcome. The court could still order it.
A payment made, banked and budgeted against since 2022 could, in theory, have to be reversed. The certainty these settlements are sold on is not actually guaranteed by anything beyond the deal holding up in court.
That risk does not sit with ABB or McKinsey alone.
CARA funds, once paid in, get allocated against the state’s broader anti-corruption work. About R2.2 billion drawn from the account, mostly from the ABB resolution, has already gone toward funding the government’s response to illegal mining.
If a court orders that money returned, the practical consequence falls on whatever programme it was already spent on, not on a line item sitting untouched in reserve. Taxpayers, not the companies that paid the original bribes, would absorb that particular shock.
What’s Missing
Here is the gap in the official account that deserves more attention than it gets.
No South African court has ever tested ABB’s underlying conduct on the merits. The only judicial findings on record are American: ABB’s admission to the US Department of Justice, and Vikas Sagar’s guilty plea in the McKinsey matter, also in the US.
South Africa’s own settlements were negotiated, not litigated. There is no domestic verdict establishing what actually happened at Kusile, Transnet or Eskom, only a series of agreements in which companies accepted responsibility without a trial ever testing the evidence against them.
That absence of a local judicial record is exactly what gives Koko’s argument its opening, regardless of what one thinks of his motives for making it.
Why This Should Matter to Your Business
If your business has a subsidiary, a joint venture, an agent or a state-linked contract that predates roughly 2018, some version of this exposure may exist on your books without anyone having gone looking for it.
It does not announce itself the way Kusile did. It looks like an acquisition nobody has re-examined since the deal closed, a relationship managed by someone who left the company years ago, a facilitation fee on an old tender that nobody questioned because the project delivered and the numbers balanced at the time.
The uncomfortable truth in both the ABB and McKinsey cases is that the companies did not find these problems through their own ordinary governance processes.
Whistleblower reports, commissions of inquiry, foreign prosecutors and leaked documents did the finding for them. By the time each company began cooperating in earnest, the cost of doing so was no longer optional. It was the only way to avoid a worse outcome.
A board that waits for that same external pressure before it looks at its own legacy contracts is negotiating from a position it has already lost.
Both ABB and McKinsey reduced their own exposure by eventually finding their own problems and handing over the evidence before being compelled to.
McKinsey’s resolution credits its own internal investigation. The NPA’s statements on ABB credit similar voluntary cooperation, including witnesses and evidence the company supplied.
A business that only starts asking these questions once a subpoena arrives has already given up the negotiating position that made both settlements possible in the first place.
The Open Question
Whether Koko wins is a separate question from whether the model survives.
If a R2.5 billion settlement, paid and closed in 2022, can still be unwound today, then the certainty companies believe they are buying when they settle may be worth less than the rand figure attached to it.
That is the detail worth sitting with longer than the headline number. The court’s ruling, whenever it comes, will not only decide Matshela Koko’s fate. It will decide whether settled, in South Africa, actually means settled.