Bain & Co – still trying to gloss over the shocking facts

Stephen York, Bain & Company’s managing partner in South Africa, took out a page three, full-page advert in Business Day necessitated, he said, because much of what South Africans had read and heard about Bain was untrue. But it is deeply cynical to pretend that the pursuit of truth is the object of his letter – those claims simply don’t align with the facts, laments Nicole Fritz, director of the Helen Suzman Foundation. On two separate occasions, Bain was offered the opportunity to demonstrate its cooperation and provide full disclosure to the South African public and our authorities as to its involvement at SARS. In both instances it declined. At the Zondo Commission, it was left to Athol Williams, a former Bain employee and whistleblower, to detail the extent of Bain’s connivance in the destruction of SARS. Bain’s only intervention was to seek to publish an affidavit attempting to refute William’s testimony. The actions of Bain, Mr Moyane and his coterie left the culture that had prevailed at SARS decimated and the service broken. People of principle were harmed, lives damaged and the enormity of the damage done is difficult to quantify. Who can say which school children might have had textbooks, which hospital patients access to life-saving treatment, which roads might have been repaired, had it been that SARS had not been broken, its revenues not under-collected? What can be said with certainty is that Bain’s apology and repayment of fees is no recompense. A fundamental principle of reparation is that it should be proportional to the gravity of the violation perpetrated and the harm suffered. And there is still no proper disclosure. This article was first published by Politicsweb.- Sandra Laurence

Bain’s cynical damage control does little to fix the harm done in SA

By Nicole Fritz*

On Friday, Stephen York, Bain & Company’s managing partner in South Africa, took out a page three, full-page advert in Business Day appealing for “constructive dialogue” with South Africans. It comes in response to the UK’s recent decision to ban Bain from receiving work from the UK’s Cabinet Office for a period of three years, a move triggered by disclosure of Bain’s involvement in state capture in South Africa and specifically the dismantlement of the South African Revenue Service (SARS).

York said his letter was necessitated because much of what South Africans had read and heard about Bain was untrue. But it is deeply cynical to pretend that the pursuit of truth is the object of his letter.

Take his claims that Bain started proactively reaching out to South African authorities in 2018 to offer our cooperation and that “we are prepared to have the tough conversations”. Those claims simply don’t align with the facts.

On two separate occasions, Bain was offered the opportunity to demonstrate its cooperation and provide full disclosure to the South African public and our authorities as to its involvement at SARS. In both instances it declined. When Vittorio Massone, then Bain’s managing partner in SA, absconded from the country and the Commission of Inquiry into Tax Administration and Governance by SARS (“the Nugent Commission”), having been caught out in his web of lies, Bain refused to send any other representative to the Commission to explain its conduct, insisting that “Bain believes that there is no one other than Mr Massone who can provide meaningful information.”

As the Nugent Report found, that was simply untrue.

Then at the Judicial Commission of Inquiry into State Capture (“the Zondo Commission”), it was left to Athol Williams, a former Bain employee and whistleblower, to detail the extent of Bain’s connivance in the destruction of SARS. Bain’s only intervention was to seek to publish an affidavit attempting to refute William’s testimony. Told by Justice Zondo that it might only do so if its representatives would themselves give evidence before the Commission, Bain again refused.

York makes no mention of this failure to provide evidence to the two separate judicial commissions of inquiry or of the findings and recommendations which implicate Bain. Instead he points the public to Bain’s own representation of events available on its website. 

So much for wanting to have the tough conversations.

Still, however misleading Bain has been as to its willingness to provide full account of its wrongdoing, its pales alongside the deception relating to the wrongdoing itself. York would have you believe that while Bain made serious mistakes, they were merely unwitting bystanders in the process of state capture – unaware that “SARS leadership had a different agenda”, helpless to act when “our work was used by others to further their agenda”. 

Again, Bain’s version is simply inconsistent with the facts. It is belied by the findings of the Nugent Commission “that what occurred can fairly be described as a premeditated offensive against SARS, strategized by the local office of Bain & Company Inc, located in Boston, for Mr Moyane to seize SARS.”

It is belied by the strategy documents produced by Bain for Mr Moyane long before either had yet set foot in SARS, which include identification of persons employed at SARS to neutralize. Those persons were then in fact neutralised on Mr Moyane’s taking office and their neutralisation was gleefully recorded by Bain partners in email exchanges.

It is belied by the deal Bain struck with Ambrobrite, an entity of no obvious relation to Bain but for its ability to secure access to former President Zuma and his confidants. The contract concluded in 2013 ominously records that the intelligence offered Bain by Ambrobrite discloses “that in the next few years a number of State Owned Enterprises and Agencies will be subject to leadership and strategic changes that will require significant transformation and turn-around processes.” The second-highest paid of all Bain’s service-providers worldwide, even Bain’s own director of finance in London, was compelled to label the Ambrobrite partnership “very dodgy”.

And it is belied by the manner in which Bain connived systematically to avoid an open, competitive bidding process so as to secure the lucrative SARS restructuring contract. As the Nugent Commission report finds, both the Bid Evaluation and the Bid Adjudication Committees and the Minister of Finance were misled by non-disclosures relating to that contract and it recommends that the National Prosecution Authority consider prosecution for fraud.

It’s worth recalling not only the recommendations of the Nugent Commission’s report but also its observations. Here’s one relating to the culture that prevailed at SARS prior to Bain and Mr Moyane’s entry on the scene:

“We heard it said that skilled professionals left lucrative positions to join SARS because they wanted to participate in this higher purpose. We heard it said that the environment was stimulating and innovative, that debate was open and rigorous, that employees were willing to work long hours without extra remuneration when that was required because they shared a commitment to that higher purpose of service to the country.”

We South Africans are now so jaded that talk of higher purpose instinctively triggers cynicism and suspicion. After all, Mr York assures us that the employees of Bain all joined “to help South African organisations grow, innovate, excel.”

But make no mistake, the actions of Bain, Mr Moyane and his coterie left that culture decimated and SARS broken. People of principle were harmed and lives damaged. Here was an organisation that had been held up globally as a model of revenue collection and that had been deliberatively designed to fit South African specifics – with its deeply unequal society, low tax base and historically low levels of compliance, requiring administration of a highly redistributive fiscal scheme if SA was to realise its constitutional and democratic obligations. 

It was abandoned to the depredation of a management consultancy firm, headquartered in the United States, with only peripheral experience of tax collection and a strategy developed by reference to best practices in New Zealand and Northern Europe and without any real consultation with those staffing SARS. 

The impact of the predatory scheming was almost immediate. Shortfall in revenue collection amounted to billions of rands. Illicit activities, previously tightly curbed by SARS’ investigate and enforcement capacities but now dismantled, exploded. 

The enormity of the damage done is difficult to quantify. Who can say which school children might have had textbooks, which hospital patients access to life-saving treatment, which roads might have been repaired, had it been that SARS had not been broken, its revenues not under-collected?

What can be said with certainty is that Bain’s apology and repayment of fees is no recompense. A fundamental principle of reparation is that it should be proportional to the gravity of the violation perpetrated and the harm suffered. 

And there is still no proper disclosure. In the words of the Nugent commission’s report:

Bain ought to know. . .that what the South African people want to know is what happened to their country’s institutions, and the information Bain has will help to find that out. If Bain wants truly to make reparation, then it should give South Africans what they want, and not what Bain thinks they should have, which it has steadfastly refrained from doing. Payment of money without prior disclosure of the truth is not reparation but is marketing instead.

Equally, an appeal to constructive dialogue without prior disclosure of the truth is just very expensive marketing.

A version of this article first appeared in Business Day.

  • Nicole Fritz is Director, Helen Suzman Foundation. 

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