EDINBURGH — The state capture scandal that erupted while Jacob Zuma was president continues to make global headlines, with consultancy Bain the latest multinational exposed for corruption in South Africa. Bain employees worked hand-in-glove with the Zuma and Gupta families to ensure that Zuma lackeys took control of the South African Revenue Service and corruption-busters were pushed out. The Financial Times updates its readers on how Bain and Big Four audit firm KPMG played a key role in the state capture scandal. – Jackie Cameron
By Thulasizwe Sithole
One of the most senior ministers in President Cyril Ramaphosa’s cabinet has warned Bain, the global management consultancy, to come clean about its alleged role in corrupting South Africa’s revenue authority. This is the headline news about South Africa in the Financial Times, which updates its readers on the role of Bain in corruption.
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Gordhan, the minister of public enterprises, told the Financial Times that the US-based consultancy had acted even more egregiously than other international firms implicated in South Africa’s “state capture” scandal, including McKinsey and KPMG.
State capture is a term widely used to describe the alleged systematic ransacking of institutions under Jacob Zuma, the former president, explains the FT.
“There’s an even higher level of collusion in Bain,” said Gordhan, who accused the company of playing a big role in capturing the South African Revenue Service, which had been a world-class institution. Gordhan once headed the service and is also a former finance minister, notes the FT.
“Bain has been accused by former Sars employees of giving advice to Tom Moyane, Mr Zuma’s appointee as head of the revenue service, on a restructuring of the organisation used to purge internal opponents and weaken controls.
“Last month Vittorio Massone, Bain’s head in South Africa, told a judicial inquiry investigating the scandal that ‘we might have been used’ by Mr Moyane.
“Under Mr Moyane, Sars allegedly went easy on the tax affairs of President Zuma as well as his business associates.
“Mr Zuma and Mr Moyane have both denied wrongdoing,” continues the FT.
Bain has launched its own investigation of its work at Sars, conducted by the law firm Baker Mackenzie, says the London-based business newspaper.
“If they find evidence of illegal or unethical behaviour, we will deal with it appropriately,” Bain said in response to Mr Gordhan’s remarks. “We remain committed to the country, to learning the facts and to doing what is right.”
The firm has also set aside the fees it earned from Sars. Bain told the FT: “We do not want to benefit from work that was used to further a different agenda than was intended.”
According to Gordhan, the inquiry into Sars had shown “the devastating impact state capture had in what was a key fiscal institution”. The erosion of the organisation had cost big losses in tax collection, he said, depriving ordinary South Africans of public support.
“Bain has been trying to play it low key, saying they’ve set aside money,” Gordhan, who was attending the FT Africa Summit in London, is reported as saying.
“But they need to tell the South African public a lot more as to how and why within the system of checks and balances did they get involved and become almost central to the capture of the revenue services,” he emphasised.
“Gordhan said McKinsey had gone some way to repairing the damage, but added that KPMG had not done nearly enough to restore confidence.
“KPMG has been extremely stubborn [and] lacks transparency in what they’re doing,” he said. “All their manoeuvres have been about avoiding taking responsibility for the malfeasance that they’ve been guilty of,” added Gordhan.
Wiseman Nkuhlu, KPMG’s executive chairman in South Africa, is quoted as saying that changes to the firm’s leadership and governance in the past year showed its commitment to being an organisation “that is transparent and takes responsibility for our actions”.
“We know there is more to do, but we’re determined to keep taking the necessary steps,” Nkuhlu added.
Since he became president of the African National Congress in December, Ramaphosa has promised to weed out corruption at all levels of the party.
In addition to the judicial probe of Sars, a broader commission of inquiry is examining the extent of corruption during the Zuma years. There is also an inquiry into possible wrongdoing at the Public Investment Corporation, the largest pension fund in Africa, says the FT.
