This is part two in a three-story series on Bain & Co South Africa’s corrupt relationship with key politicians and fixers in a bid to elbow its way into the local market.
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Note: Nicola Wilson, Bain spokesperson, responded to Scorpio’s queries relating to this story:
“While the Commission of Inquiry and our own internal investigation are ongoing we will not be commenting on specific questions relating to SARS and our work. We look forward to engaging with you once we are in a position to do so.”
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An email from Bain & Co’s server suggests that the firm’s local head Vittorio Massone and his team celebrated the shock resignation of SARS Chief Officer Barry Hore in December 2014.
“Goodbye Barry Hore…”, wrote Fabrice Franzen in an email time-stamped at 06:11 on the morning of 3 December 2014.
Franzen is a partner in Bain’s Johannesburg office, heading the firm’s financial services practice, the company’s website states. Franzen reacted to an alert from SARS notifying the private sector that Hore has resigned.
Franzen sent the email to Massone, who replied later that morning:
“Now I’m scared by Tom… This guy [Hore] was supposed to be untouchable and it took Tom just a few weeks to make him resign…Scary…”
This email exchange between Massone and Franzen was sent days before Bain tendered for the job to review SARS’ operating model, and about a month before Bain received the tender in a possibly rigged process. Apart from it being fairly celebratory in tone, the email further suggests that Massone and Franzen were aware of the intricate dynamics at play in SARS and were invested in what happened at the revenue service.
In researching this story, Scorpio had to speak to Bain insiders who worked with Massone. They alleged that several Bain partners didn’t like Massone’s style. There were discussions between the partners – and with Massone – about his methods and the nefarious company he kept, one Bain insider said. Yet, Massone was undeterred – he often boasted that he was one of the best-paid Bain partners globally, our sources said.
“Partners are incentivised to bring in contracts for the company in that they then get a lion’s share of the money owed to the partners,” one Bain insider explained.
Franzen and Massone’s email trail, along with other documents emanating from Bain’s server, Massone’s testimony before the Nugent Commission of Inquiry into governance and administration issues at SARS, as well as the intimate knowledge of key SARS and Bain sources, suggest that Bain had an ominous reason to celebrate.
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Since late 2013 Bain, a multinational consulting firm, coached Tom Moyane into believing that SARS had “key strategic concerns” to correct and individuals unwilling to co-operate to “neutralise”.
Moyane, however, was only appointed to the top job at SARS in September 2014. In Bain Files, Part 1 we showed that Massone and his team had been coaching Moyane to take over as SARS head in at least six sessions from as early as October 2013. Bain spent a year on Moyane’s perception about SARS. The company then received an illegal tender to do what they have planned for over a year: Restructure SARS and bill the taxpayer R187-million to do so.
SARS’ modernisation and IT programmes were two key sectors that, in Bain’s opinion, were in dire need of some Bain magic. Yet, by 2013, SARS had won international and local accolades for being an exemplary revenue collector. First World countries sought SARS’ advice; the American revenue collector signed a collaboration agreement with SARS; and the revenue service was a leading light in Africa.
In documents drafted for Moyane in 2013, Massone’s team opined that “to achieve our ambition and make the difference, SARS needs to address key strategic concerns” [Bain’s emphasis]. This opinion was based on an outside-in-look – in other words, a desktop search on SARS.
A PowerPoint presentation provided to Moyane on 13 October 2013 had this to say:
“In order to transform SARS into an innovative revenue and custom agency (sic), SA government will have to run a profound strategy refresh and focus on execution to reach SARS real full potential” [Bain’s emphasis].
It continues, highlighting this goal to be achieved:
“Transform SARS in an innovative revenue and custom agency (sic) that enhanced economic growth and social development, and support the countrie’s (sic) integration into the global economy in a way that benefits all South Africans.”
(Keeping in mind that SARS was internationally recognised, this is also a curious statement not supported by facts.)
Bain colluded with Moyane on how to “transform” SARS more than a year before they received the possibly illegal tender to do so.
The document continues to list a series of deliverables that needed to be achieved. Critically, it includes developing SARS’ IT systems, operation model and enforcement structures. It seems however that Bain realised Hore would be in the way. In this October 2013 document Bain identified Hore’s position of Chief Operating Officer as “playing a critical role into SARS organisation” (sic) who is responsible for a “wide range of activities – directly responsible for delivery”.
Bain continued its onslaught on Hore in May 2014. In a document titled “First 100 days”, Bain advises Moyane on the key changes he needed to make in SARS.
Under the heading “1. Keep the ball Rolling”, Bain writes: “Testing BH and assessing performance of different components of COO perimeter”.
Scorpio has extensively questioned a Bain insider who is familiar with the SARS project. The source confirmed that “BH” stands for “Barry Hore”. The same Bain insider gave a chilling description of the inclusion of Hore’s name in the brief to Moyane:
“I worked at Bain for some time… to me it is ominous that Massone included Hore’s name. It is not normal practice. It means he was a target. When the document says Hore must be ‘tested’, it is a red flag… It seems that the team was targeting Hore.”
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While Bain’s machinations happened behind a veil of secrecy at the time, Moyane hit the ground running. Days after Moyane was appointed in September 2014, the first fake “SARS rogue unit” article appeared in the Sunday Times. The plethora of articles from the Sunday Times provided to Moyane the moral high ground to neutralise then deputy commissioner Ivan Pillay, head of strategy Peter Richer and head of investigations Johann van Loggerenberg on the grounds that they were involved in nefarious activities. It did not matter to Moyane that these officials were fairly removed from the day-to-day operations of the unit described as being “rogue”.
Two years later, in 2016, the Sunday Times had to retract and apologise after repeatedly being misled by their sources. But it came too late. In late 2014 Moyane accused selected SARS officials of impropriety. Moyane and his legal firm of choice Mashiane, Moodley & Monama manipulated the subsequent KPMG investigation in order to find guilt where the facts could not substantiate the accusations. This has all been fairly well publicised.
What happened to Hore is, however, still covered by a veil of secrecy. Mostly because Hore is still bound by confidentiality agreements he was forced to sign upon leaving SARS. To Scorpio, he declined to explain what happened, citing this reason. The sequence of events is also kept secret by certain SARS insiders, because it is not in the self-interest of select SARS HR officials to explain what really happened.
Proper documents explaining how Hore left SARS do not seem to exist. Scorpio pieced the event together by speaking to witnesses. They say that by late November Hore realised that he and Moyane would probably not be able to work together. Moyane had by then already stopped Hore’s modernisation programme.
(In those days, it was unfathomable as to why Moyane would do so, sources said. After reading Bain’s documents, it is clear that the decision, with ramifications reverberating to this day, was made at Bain’s instigation.)
One day in late November, Hore hosted a deputy director-general from another department relating to a project SARS assisted him with. The deputy director-general had a medical condition Hore had empathy with. Hore asked a junior male colleague who had no real interest in the meeting to make the deputy director-general some tea in order to sooth his condition while the meeting commenced. The junior colleague took great umbrage at this insult and laid a grievance against Hore, accusing him of being racist. Hore attempted to sort out the difference in perception and apologised to his junior.
“They literally hugged and made up,” a witness told Scorpio.
That should have been the end of it. Yet, days later, Hore was ambushed in a meeting about his modernisation programme, with the same grievance. Somehow the apology had been swept off the table and Hore was on the verge of being charged. The incident directly led to Hore’s resignation a few days later.
Bain’s Franzen and Massone celebrated. A gatekeeper was removed and the path to restructuring SARS was now wide open. DM
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