Bain & Co, the Boston-based global management consulting firm, has been hit with a ten-year ban from tendering for government contracts in South Africa because of its “corrupt and fraudulent practices” at the SA Revenue Service. 

The National Treasury announced the ban on Bain & Co on Thursday 29 September — a move that seeks to punish the management consulting firm and hold it accountable for bringing Sars to its knees during the State Capture years. Sars was once a world-renowned tax collection agency.

“The effective date of restriction [or ban from tendering state contracts] is 5 September 2022 until 4 September 2032 for engaging in corrupt and fraudulent practices related to a Sars contract,” the Treasury said in a statement. 

The ban on Bain will apply to any other contract that is awarded in the public sector, said the Treasury, which is responsible for overseeing and approving the procurement function of services and goods in all spheres of the government. The government has a large procurement function, with an annual budget of more than R1-trillion that is spent on purchasing goods and services from private sector companies.

The Treasury said it is working with Sars to boot out Bain from its database of suppliers “through a phased approach”. This work will also extend to the database of other state organs, which might have procured services from Bain. 

The Treasury’s decision follows that of Britain, which became the first western country to impose a similar penalty on Bain for its role in State Capture during Jacob Zuma’s two-term presidency. There is already pressure on the US to follow suit. 

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Lord Peter Hain, the veteran anti-apartheid campaigner, has urged governments around the world to punish Bain for enabling corruption in South Africa. Hain has welcomed the Treasury’s decision, saying it has “established an important precedent” which he hopes that “other governments across the world will follow”. 

“Starting with the US, I wrote to President Biden a few weeks ago requesting he does the same. It is critical that other global consultancies understand that there will be penalties if they are complicit in corruption like Bain was,” Hain said in a statement.

Findings against Bain by commissions of inquiries 

Bain has been marred in serious State Capture findings in recent years. 

Two commissions of inquiries (the Zondo and Nugent Commissions) have placed Bain at the centre of capturing, restructuring, and destroying Sars by colluding with the tax collection agency’s former commissioner Tom Moyane and former president Jacob Zuma. 

In 2014, Moyane awarded Bain the tender to restructure Sars’s operations, including overhauling its IT infrastructure and changing its organisational/governance structure. Bain’s restructuring destroyed key Sars units, including its large business centre, legal and compliance units, and enforcement capacity. About 200 senior managers were displaced, and several skilled employees left Sars, weakening its world-class capacity to collect tax revenue.

Part one of the Zondo commission report found that Sars was a clear example of State Capture and how the private sector colluded with Zuma “to capture an institution that was highly regarded internationally and render it ineffective.”

It’s unclear how much money Bain eked out from the state through contracts. But in 2018, Bain made an undertaking to pay Sars R217-million (including interest) for its botched restructuring of the tax collection agency. 

Bain has accepted that “through various lapses in leadership and governance” it became an “unwitting participant in a process that inflicted serious damage” on Sars. Bain apologised for this but has recently doubled down as it denied participating in or enabling State Capture. Bain recently said “mistakes” were made in its work at Sars, but it remained confident that it “not in any way wilfully or knowingly support State Capture at Sars or elsewhere.”

The Treasury’s decision will likely spark a call for the private sector to also eject Bain from their databases of suppliers. National Treasury’s acting director-general, Ismail Momoniat, has been consistent in calling for companies in the private sector to not do business with Bain. DM/BM

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