Bain & Company presents itself as a reputable global consultancy operating across the world with an office in London and recent contracts worth £55-million with the Cabinet Office alone.
Yet, in South Africa, Bain brazenly assisted former president Jacob Zuma to organise his decade of shameless looting and corruption, the company earning fees estimated at £100-million (R2-billion) from state institutions.
South Africa’s State Capture commission, a judicial inquiry headed by Deputy Chief Justice Raymond Zondo, indicted Bain’s work with the South African Revenue Service SARS as “unlawful” and recommended that all its South African public sector contracts be re-examined with a view to prosecution.
At the time, Bain South Africa’s work was endorsed by both its London office and its US headquarters in Boston.
Bain has also been disgracefully smearing Mr Athol Williams, a key whistle-blower, praised by the Zondo Commission, who recently had to flee to the UK for his safety.
Given the scandalous collusion of Bain UK and Bain USA. I am asking that the UK Government and the US government immediately suspend all public sector contracts with Bain.
I wrote three weeks ago to the Prime Minister requesting this and he has just replied stating the Cabinet Office will “look into this matter with urgency”.
However, Bain’s shamefully shady behaviour is just the “tip of the iceberg”. The prodigious looting, corruption and money laundering under former president Zuma would not have been possible without the complicity of Bain, KPMG, McKinsey, SAP, Hogan Lovells and the banks HSBC, Standard Chartered and Baroda.
These fee-clutching, global corporates and turn-a-blind-eye governments — from London and Washington to Dubai, Delhi and Beijing — helped rob South African taxpayers, contributing to a catastrophic loss of its GDP of around a fifth. Economists estimate the full cost of the Zuma State Capture to be a monumental £750-million or R1.5-trillion (the government’s total annual expenditure is just R2-trillion).
These global corporates all obtained sweetheart state contracts which helped Zuma’s business associates, the Gupta brothers, to loot the state.
Global banks like HSBC, Standard Chartered and Baroda transferred this looted money through their digital pipelines to less regulated jurisdictions like Dubai and Hong Kong, or British Overseas Territories in the Caribbean, to then “clean” the money by mingling it with other funds — disguising its origins and enabling it to be more easily spent.
Lawyers and accountants assisted the Guptas to set up complex “shell” (front) companies, hiding their true owners (the Guptas or their associates) and enabling money to be moved to a country where there is low transparency.
Dishonest audits left suspicious transactions hidden. Estate agents received laundered money during Gupta property purchases.
Global brand names from KPMG to McKinsey, from HSBC to Standard Chartered, all profited while the Guptas hid and spent stolen funds that could otherwise have been destined for essential South African public services, job creation or infrastructure, leaving South Africa’s public finances near bankrupted and its growth stalled.
I, therefore, find it completely unacceptable that Bain is licensed to operate commercially in the UK, the USA or anywhere else in the world — at least until it has repaid all its fees earned from the South African state during the Zuma/Gupta years, and answered charges in the courts there.
Unless the UK, US, Chinese, Indian and UAE governments cooperate with each other, State Capture will happen again, either in South Africa or other countries.
The truth is that international criminals continue to loot and money launder with impunity through centres like London, New York, Hong Kong, Delhi and Dubai. Ministers talk the talk on corruption but refuse to take the necessary tough action against guilty big corporations to stop it.
Meanwhile, financial crime is estimated by the United Nations Office on Drugs and Crime to be worth around 5% of global GDP, or $2-trillion, each and every year. DM
This is an edited version of Lord Hain’s speech during the UK House of Lords’ debate on Global Democratic Norms on 3 February 2022.