World

OPEN LETTER

Dear President Biden, no reputable government should do business with Bain & Co

Dear President Biden, no reputable government should do business with Bain & Co
US President Joe Biden.(Photo: Bloomberg) / (Photo: bain.com) | Peter Hain. (Photo: Dan Kitwood / Getty Images)

‘Until a global corporate like Bain ceases its complicity in state corruption in countries like South Africa, pays back all the considerable fees earned, and the legal and prosecutorial proceedings it is now facing in South Africa are completed, no reputable government should do business with it,’ British politician and human rights campaigner Peter Hain writes in a letter to US President Joe Biden.

Dear President Biden,

This letter follows my exchange in February 2022 with the US ambassador to the UK over the role played by Boston-headquartered US management consulting firm Bain & Co in wide-scale corruption in South Africa and the undermining of that country’s democratic institutions.

In August this year, the UK Cabinet Office instituted a three-year suspension from UK government contracts on Bain & Co, on the basis that the company “is guilty of grave professional misconduct” in relation to its operations in South Africa.

That followed my repeated calls for the UK to take such action after Bain’s despicable and shameful behaviour in colluding with former South African President Jacob Zuma and advising him personally on how to disable the South African Revenue Service (SARS) in pursuance of his corrupt and malevolent purposes.

I urge the US government to similarly institute a ban on Bain working for any public sector organisation in your country, at least until the current judicial process over Bain’s nefarious role in South Africa has completed its full course.

The UK government’s decision follows the findings of two independent judicial commissions of inquiry in South Africa, namely the Nugent Commission chaired by Judge Robert Nugent in 2018; and the Zondo Commission, chaired by Chief Justice Raymond Zondo, which concluded this year. 

Both commissions found Bain to have been directly and intentionally involved in dismantling SARS, the country’s tax authority, resulting in its inability to meet the country’s tax revenue targets and the boom of illicit trade with devastating knock-on economic effects.

The commissions described Bain to have been involved in a “premeditated offensive” against SARS and that their involvement was “unlawful”. So concerned with Bain’s involvement in the public sector was the Zondo Commission that it recommended a review of all Bain’s South African public sector contracts with a view to prosecution in its final report.

Bain’s transgressions in South Africa have led to it being the subject of a US Department of Justice investigation as well as investigations by the South African National Prosecuting Authority (NPA) and the Special Investigating Unit (SIU). Its close relationship with Zuma placed it in the same network as his notorious associates, the Gupta brothers, whom the US Treasury sanctioned for corruption in October 2019.

Bain’s US-based global managing partner, Manny Maceda, underplays his company’s actions at SARS as “mistakes”. But that contemptuously belittles the immense social and economic damage Bain’s behaviour has caused ordinary South Africans already suffering from crippling inequality and poverty under apartheid, as well as the industrial-scale looting and cronyism during the Zuma decade in which Bain was complicit.


Visit Daily Maverick’s home page for more news, analysis and investigations


‘Deliberate strategy’

As evidence presented at both judicial commissions showed, Bain’s relationship with Zuma followed a deliberate strategy endorsed by Bain’s global leadership — to court favour with Zuma through known Zuma-affiliates, paid by Bain, who themselves are the subject of ongoing investigations in the US and South Africa.

Yet Maceda wants to lay the blame on the former head of Bain’s local office, Vittorio Massone, and claim that with his departure, it has now cleaned out its stables. Nothing is further from the truth.

At least 60 Bain employees were involved, including four senior Bain officials currently based in the US, namely (with current office location in brackets): Onyinye Ibeneche Avbovbo (Boston), Eric Maltiel (San Francisco), Bjorn Matthews (Dallas) and Richard Wilson (Denver).

As news of Bain’s involvement broke, Bain cynically simply shuffled its staff out of South Africa to its global offices. Fabrice Franzen, the partner who ran the day-to-day maliciously destructive work at SARS, remains at Bain and is now based in the Middle East. So, too, is the partner Stephane Timpano, who prepared most of the materials presented to Zuma. Massone, who had been promoted to run Bain’s Middle East operation, was paid to leave the firm after a three-month negotiation.

To this day, at least 20 senior people remain at the firm who were in some way involved in the South African business at the time of the collusion with Zuma.

Not only were senior US and UK Bain managers complicit in South Africa’s decade of corrupt State Capture, but they are also trying everything possible to cover it up. That has included punishing and seeking to discredit one of its former senior partners, Athol Williams, who provided valuable evidence to both judicial commissions and to the UK Cabinet Office, and was explicitly praised by the Zondo Commission.

Part of Williams’s evidence has called into question the validity of Bain’s internal investigation, conducted by US law firm Baker McKenzie, whose full findings Bain failed to make available to both the Nugent and Zondo judicial commissions, prompting them to accuse Bain of failing to cooperate as it should have.

‘Polished advertorials’

Despite widespread appeals for Bain to make a full disclosure of its shabby role during the Zuma/Gupta era, it has continued to withhold this evidence, choosing instead to publish polished advertorials in newspapers.

While Maceda states that Bain is committed to ensuring their “mistakes” are not repeated, he is silent on any commitment to make amends. Although it has repaid the fees it earned from SARS, it has not repaid the much larger proportion of its fees earned through other questionable contracts with corrupted state-owned enterprises, and has certainly made no amends to the institutions and people it harmed.

I find it disturbing that a company of Bain’s stature is deemed to have “colluded with the [South African] Executive, including President Zuma, to capture an institution [SARS] that was highly regarded internationally and render it ineffective”, as stated by the Zondo Commission, which concludes that Bain’s involvement with Zuma and SARS is “one of the clearest demonstrations of State Capture”.

Until a global corporate like Bain ceases its complicity in state corruption in countries like South Africa, pays back all the considerable fees earned, and the legal and prosecutorial proceedings it is now facing in South Africa are completed, no reputable government should do business with it, certainly not in the US where Bain senior executives are up to their necks in both that complicity and subsequent cover-ups of it.

I am therefore appealing to you to act on this matter and establish a clear precedent that will signal to all US global companies, consultancies, lawyers, auditors and financial advisers that collusion with corrupt politicians and their business cronies in other countries will not be tolerated.

Yours sincerely,

Peter Hain DM

Lord Hain is a member of the House of Lords. He is a former anti-apartheid leader and UK Cabinet minister.

 

Gallery

Comments - Please in order to comment.

  • Stephen Mullins says:

    Thank you, Peter Hain.

  • Dennis Bailey says:

    If the Brits won’t, then unlikely the USA will. Nice to know a Lord has asked, even if the rest of English parli lacks backbone. It would have been nicer and perhaps more potent coming from our President or his cabinet. We dan dream…

  • Geoff Krige says:

    What about McKinsey? It was probably not as close to the destruction of key state institutions as Bain, but it has been implicated in corrupt dealings to the extent of agreeing to pay back significant amount of fees earned. KMPG and PWC were not far behind. Will any of these also be censured?

  • Cunningham Ngcukana says:

    We salute Lord Hain for his indefatigable support of this country and its people and his life long association with our country. His clarity on what needs to be done with the Zondo Commission is very amazing and highly appreciated by all those who fought for freedom only to realise that the ANC is prepared to sell this country for thirty pieces of silver. We do not expect the ANC and the government to do anything about state capture nor the NPA would put senior politicians within the ANC on trial. This is very simple, if you charge Zweli Mkhize, Mantashe, Ramaphosa, Zuma and others it would be very odd indeed if the ANC as an entity is not charged as a criminal syndicate. It was also very odd that Zondo did not call for the indictment of the ANC for enabling state capture. We rely on the people of South Africa and their formation to rid this country of corruption and prosecution of the corrupt. It may be necessary to raise funds for the private prosecution of the people named in the Zondo Commission.

  • Sheda Habib says:

    100% right.
    Well done Athol Williams for approaching Peter Hain and explaining Bain’s corruption to him.

Please peer review 3 community comments before your comment can be posted

X

This article is free to read.

Sign up for free or sign in to continue reading.

Unlike our competitors, we don’t force you to pay to read the news but we do need your email address to make your experience better.


Nearly there! Create a password to finish signing up with us:

Please enter your password or get a sign in link if you’ve forgotten

Open Sesame! Thanks for signing up.

We would like our readers to start paying for Daily Maverick...

…but we are not going to force you to. Over 10 million users come to us each month for the news. We have not put it behind a paywall because the truth should not be a luxury.

Instead we ask our readers who can afford to contribute, even a small amount each month, to do so.

If you appreciate it and want to see us keep going then please consider contributing whatever you can.

Support Daily Maverick→
Payment options

Become a Maverick Insider

This could have been a paywall

On another site this would have been a paywall. Maverick Insider keeps our content free for all.

Become an Insider

Every seed of hope will one day sprout.

South African citizens throughout the country are standing up for our human rights. Stay informed, connected and inspired by our weekly FREE Maverick Citizen newsletter.