On Tuesday, 4 January 2022, President Cyril Ramaphosa of South Africa took delivery of the first part (of three) of a report issued by the country’s Judicial Commission of Inquiry into State Capture. The commission conducted its work from 2018 to 2021 on a mandate to investigate allegations of State Capture, corruption, money laundering and fraud across the South African public sector, focusing on the decade during former president Jacob Zuma’s tenure, during which hundreds of millions of pounds sterling (billions of rands) were looted from taxpayers, much of it laundered abroad, including through UK-based banks.
One of the organs of state highlighted by the commission was the South African Revenue Service (SARS), which had its tax collection and enforcement capabilities massively and systematically damaged during the Zuma administration, rendering it ineffective in enforcing tax compliance. Shamefully, the commission found that this serious damage to SARS’s tax-raising capacity resulted directly from deliberate actions, including by a prominent global corporation operating in the UK, Bain & Company. It was found to be instrumental in undermining the capabilities of SARS in return for generous fees of R164-million (£8-million).
The commission found that Bain had directly colluded with Zuma and Tom Moyane (appointed by Zuma as head of SARS then fired by President Cyril Ramaphosa, and who the commission recommends be prosecuted for perjury) to repurpose SARS under the guise of restructuring the organisation. Bain had frequent meetings with Zuma and Moyane to develop the restructuring plans over a 12-month period before Moyane was appointed. Once appointed, Moyane appointed Bain as his consultants.
The commission found that Bain’s involvement at SARS was “unlawful”. The report highlights the multiple irregular procurement processes that Bain engaged in that saw a six-week contract extended to 27 months by flouting government procurement rules.
The commission’s recommendation is a startling one, which confirms the deep concern the South African authorities have had about Bain’s despicable activities in that society. The commission has recommended that all Bain’s contracts with state departments and organs of state be re-examined for compliance with the relevant statutory and constitutional provisions and subsequently that law enforcement agencies investigate these contracts and proceed with prosecutions.
That a multinational company such as Bain would act as a willing and knowing accomplice to corruption by those intent on undermining the South African state and its democracy, is outrageous. I therefore find it completely unacceptable that Bain & Co is licensed to operate commercially in the UK and is endorsed by your government by contracting for work with government departments and public sector bodies.
Can you therefore immediately freeze all government contracts with Bain, and advise UK public bodies to do the same, subject to Bain fully cooperating with the South African prosecutorial and investigative authorities and ensuring all the £8-million fees received from SARS are repaid in full to the SA Treasury. DM
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Bain sounds like a white collar criminal organization, and certainly this is not their first rodeo in Africa. I hope the UK pays attention: not the first British company to meddle in S.A. politics in a corrupt way.
Its likely that Bain has cast iron contracts, with penalties for early termination, etc. It’s improbable that events in another country will carry any weight.
Can we do to Bain what we did to Bell Pottinger?
Unfortunately Bain is an American company so I’m afraid Hains appeal will fall on deaf ears. A few UK organisations booting them out might serve as a warning – but reading Atholl Williams book, I dont think Bain Management will give a sh.t
The US has an act called Foreign Corrupt Practices Act. It is specifically designed for this, has nasty teeth and both Bain (and McKinsey) could look forward to hundreds of millions of dollars in fines.
Repaying fees is nothing. The Act is designed to make foreign corrupt practices very very painful.
Besides Bain and McKinsey the report also nails US aviation equipment supplier(s) for their involvement in corruption at SAA Technical. I think it was AAR.
The DoJ should assign the fines to the funding of Zondo’s anti-corruption project.
Agreed!
C.J.Rhodes and co, Lord Roberts and others, Bell Pottinger, Bain and co, KPMG, – is there no end to the UK’s destructive influence in South Africa?
I think this is a good move – Bell Pottinger sequel. Pay back the money and spill more beans. We need high ranking prosecutions, not sacrificial scapegoats.
Thank you Peter Hain. As always, when a friend a friend is in need, you have shown yourself to be a friend indeed.