(Corrects contract amount in paragraph 12 to 9.4 billion rand not 9.6 billion rand)
* McKinsey probed by S.Africa parliament over $120 mln deal
* Consultancy worked with firm controlled by Zuma's friends
* McKinsey accused of fraud but denies corruption, bribes
* McKinsey apologises to South Africa for role in scandal
By Joe Brock
JOHANNESBURG, Oct 17 (Reuters) - McKinsey said on Tuesday it was embarrassed by errors it made while working with South African utility Eskom on a 1.6 billion rand ($120 million) contract that is being investigated by parliament and police over allegations of fraud.
Privately-held McKinsey, the world's largest management consultancy, said it had parted ways with some staff involved in its work at Eskom in 2016 with Trillian, a local consultancy controlled at the time by members of the Gupta family, billionaire friends of President Jacob Zuma.
The Gupta brothers, who work with Zuma's son, Duduzane, were accused by South Africa's anti-corruption watchdog last year of using control over state agencies to siphon public funds.
Zuma and the Guptas deny wrongdoing.
In McKinsey's first admission of wrongdoing since the scandal broke in July, it said an internal investigation had found "violations of our professional standards" but did not uncover any acts of bribery or corruption.
"The behaviours of some individuals fell short of our standards. Some of our processes were inadequate and we have acted to reinforce compliance and improve them," Tom Barkin, McKinsey's Global Chief Risk Officer, said in a statement.
"We are embarrassed by these failings and we apologise to the people of South Africa."
McKinsey said it never worked with the Gupta family and did not have a contractual relationship with Trillian.
A February 2016 letter written by one of McKinsey's directors, Vikas Sagar, authorising Eskom to pay Trillian as a McKinsey subcontractor "inaccurately characterised" their relationship, McKinsey said.
Sagar has decided to leave McKinsey while other employees have been sanctioned or left the firm, McKinsey said in its statement on Tuesday, without naming the other staff. Sagar did not respond to calls for comment.
Georges Desvaux, McKinsey’s Africa head, and Saf Yeboah-Amankwah, the firm’s South Africa chief, remain at the company.
CORRUPTION
South Africa's political opposition Democratic Alliance says McKinsey steered funds to Trillian in order to secure an inflated contract with Eskom that could have totalled 9.4 billion rand ($705 million) over four years, a draft McKinsey-Trillian partnership document, seen by Reuters, showed.