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State Capture: The UK and US governments must immediately suspend all public sector contracts with Bain

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By Peter Hain
03 Feb 2022 10

Lord Peter Hain is a former anti-apartheid leader and British Cabinet Minister. His new memoir, A Pretoria Boy: South Africa’s ‘Public Enemy Number One’, has just been published by Jonathan Ball.

It is completely unacceptable that Bain is licensed to operate commercially in the UK, the US 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.

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.

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All Comments 10

  • Nobody lifted a finger when the arms deal exposed all the international players and their unethical behaviour. And nobody is going to lift a finger now, least of all BoJo the clown. The human species is truly pathetic.

  • Capitalism has become a system in which the supposed guardians of honesty and integrity have become the greediest criminals. Politicians, lawyers, auditors cannot be trusted to rule nations or corporates. Socialism is no better. To whom should we turn?

    • How about a ideology that places a definition of time as it’s core proposition or axiom. That definition is that time is the genesis of value. We are all born with time we spend it our whole lives and die with none. It is the common denominator in everything you do, even when you do nothing it costs you time. It’s regarded as a asset that everyone has its ownership is absolute and sacrosanct, unless you cause or force someone to spend their time on something without their consent, that is defined as or is the definition of a injustice. Any sanction imposed is measured in value or time you have to give up.
      It’s core postulate is that you own your time, the only right you have is to determine how you spend it, as long as your actions only positively or don’t affect others, anything you trade it for has the same attributes ie the ownership of that item is absolute. It has a exoteric logic that we subconsciously already use…. Anyhow it results in a social contract that is one up from a democracy, unanimity. It allows for the following logic to not only exist within a social contract but also be sound, everyone contributes equally and everyone benefits equally. It allows for a model that is the ideal for capitalism but strangely it’s also the ideal of socialism and all its iterations at the same time. Philosophers and scholars have always been looking for a universal definition of value and time appears to be it. Once one can define value universally interesting things happen.

      • Fascinating perspective. Thank you. Makes me think of the “time bank” initiative, which had gained traction in the UK and elsewhere

        • The interesting thing about valuing time is that it transcends the human experience. It’s applicable to all consciousness. As mentioned it’s a universal law, or law of the universe. It appears to be integral to defining natural law or the law of nature that bounds everything. You can ignore it, as we appear to be doing, by developing our own systems of justice but being a natural construct it will always be supreme to anything that we come up with when the “chips are down” as it were. So best is to figure out how it’s logic works and use that as a basis for any social contract. It’s there and it’s not a human construct so it has no human biases. It would appear to be based on time, and as Rawls says in his theory of justice, one needs a veil of ignorance, time is the perfect veil of ignorance as it has no race, color, creed, religion or any other characteristics that can introduce a bias. Our current constitution is based on a bill of rights, those rights are human constructs that bu definition will have biases. It’s a totally different paradigm but is strangely familiar. It allows for a logic to be attached to reality as it were, the logic is strangely exoteric and that’s because it’s we use it subconsciously I’m just bringing it out into the realm of the consciousness. In other words defining natural justice and the logic attached to it.

    • I think you might be criticising _unchecked_ capitalism here, rather than Capitalism itself as an idea. Unchecked capitalism is what happens when you have all the freedoms that it promises but suffer none of the consequences of dishonesty, as is demonstrated so clearly by how the socialists so eagerly loot a capitalist system while railing against its ‘unfairness’ at the same time.

      A similar criticism could be levelled against socialism as well. The point is it’s not the system that is at fault. It is our implementation of it that falters. Both systems will fail if implemented in a society that does not value freedom, responsibility, and accountability. Or in other words, the Golden Rule: treat others as you would want to be treated.

      The question we should rather be asking is which political system promotes the Golden Rule above all else. I think you might find that the more barbaric systems like despotism, communism, or fascism will fall away here exactly because they intrinsically violate the Golden Rule. Of course, cultural norms and prejudices will muddy the waters here but if South Africa is to remain as one country, we will need to hold everyone and everything we are against this simple standard.

  • There’s an error. State capture cost us only £750 million?

    R1.5 trillion is more like £75 billion.

    Just doing the math is enough to make one freak out – FGS, any South African politician could retire just on the forex translation rounding error.

  • Who would have thought, the man we (naïve sports lovers) hated with such passion because of his boycotts of our sport.
    I applaud you Sir. I just wish there were more like you who would stand up against these big governments / businesses / looters, not just in SA but all the less developed nations that are regularly milked by these greedy institutions and individuals.
    I recently read your excellent book and was truly amazed at what you accomplished at such a young age.
    Please keep beating the drum.

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