Op-ed: Was Bain’s capture of SARS fuelled by the dictates of organised crime?

Bain & Company, the global consultancy firm implicated in the systematic destruction of SARS, has a test it likes to apply to potentially dodgy situations; it’s called the ‘sunshine test’. In other words, if someone were to shine a spotlight, and drag from the shadows, a letter, strategy, idea or conversation you’ve just had and publicise it, how would it be received by the public. As a much-respected journalist once told me, before you tweet something, ask yourself whether you’d be comfortable placing it on a billboard. If the answer is ‘no’, then delete it. Now, let’s apply Bain’s own sunshine test to the contents of this hard-hitting piece by BizNews contributor Adv. Erin Richards, and ask whether we’re comfortable with the contents contained in these emails? BizNews has reached out to one of the parties referenced in the emails and committed to publishing their response should they wish to comment. – Michael Appel

By Erin Richards*

Part one of the State Capture Commission’s report triggered a national backlash against ‘leading’ consulting firm, Bain & Company South Africa, after placing Bain at the centre of the wholesale destruction of SARS.

The report’s narrative essentially contents itself with finding that Bain partook in the capture of SARS in order to secure consulting work for itself. While that may have been one motivation, an email chain evidencing a Bain-facilitated meeting between arms manufacturer Beretta, senior Italian and South African police officials (including Interpol), the Hawks, and the South African Minister of Police, raises unsettling questions and unmasks another sinister potential motivation for the capture of SARS: the facilitation of organised crime and corruption in the firearms trade.

The email chain is particularly concerning when considered against the backdrop of the inexplicable yet expeditious dismantling of SARS’  investigation and enforcement unit which focused on combating organised crime, the Projects and Evidence Management and Technical Support (PEMTS) Division.

The situation is best assessed through a referencing of chronological facts.

In 2010, Vittorio Massone transferred from Bain Italy to take up his position as Bain’s managing partner in South Africa. Massone relentlessly, and for no immediate consideration, pursued consulting work with SARS before Bain was finally awarded a six-week tender in January 2015. The tender was subsequently irregularly extended to allow Bain to continue working at SARS for another two and a half years at a cost of R167m to the fiscus. Bain’s pursuit of the tender was marked by dubious high-level political networking, seemingly facilitated by a company called Ambrobrite, which had known connections to former President Zuma and the Minister of Police.

Even though in 2015, SARS was ranked as one of the foremost tax administration authorities in the world, Bain used its 27-month long contract at SARS to consult on a “restructuring” agenda led by SARS Commissioner Tom Moyane. Absurdly, one of the legacy hallmarks of the restructuring was the large-scale destruction of the PEMTS Division. That division investigated, tracked and targeted organised crime (illicit drugs, alcohol, firearms, tobacco, etc) and the illicit economy resulting from it. The dismantling of the PEMTS Division was an odd move if one of the aims of SARS’ capture was indeed to assist Bain in procuring future consulting work.

By any measure, it seems a strange strategy to destroy the very unit responsible for increasing SARS’s collection capacity. Was there another agenda at play; another reason why the destruction of PEMTS’ anti-organised crime capacity was so expeditiously pursued?

An email chain dated between 7 September 2015 and 18 September 2015 might provide some insight. The exchange, brought to light by Bain whistle-blower Mr Athol Williams in his testimony before the Commission and discussed in his book Deep Collusion evidences plans to arrange a meeting between senior South African and Italian police officials including Interpol representatives, the Hawks, the South African Minister of Police, and representatives from firearm manufacturer Beretta. At the time this email exchange took place, Bain was officially nine months into its contract at SARS with efforts well underway to terminate PEMTS’ capacity. The crime-fighting division had been utterly gutted by the restructuring agenda that had in turn seen an increase in illicit trade across the board. The parties to the correspondence were Bain’s Vittorio Massone; Carlo Ferlito, the USA vice president of Beretta; and Michele Micheletti, Beretta’s product manager. The emails were written mostly in Italian but have been loosely translated.

The first e-mail, written to Massone by Micheletti and copying Ferlito reads:

Dear Mr Massone

Forgive me if I insist but I have spoken now with the leaders of INTERPOL Italy, they need a confirmation within this week as they have to close the programme in Namibia and obtain the final authorisation from the Chief of Police. It would be a real shame to miss this opportunity of the combination of their trip to Namibia. Please confirm as soon as possible that the proposed date is okay (30 September, in Pretoria, where?) And the names of the RSA police officers who will meet the Italian delegation.

Massone responds:

Mr Micheletti,

The meeting is confirmed. They are still defining the minister’s agenda, in particular whether that day he will be in Pretoria or Cape Town, where the Parliament is. The Minister wants to meet the ‘meet and greet’ delegation and give them a briefing. They will give me the names of the people who will be part of the South African delegation later. The person with whom to define the logistics will be Mr Moremi, the person who does ‘stakeholder management’ on behalf of the Minister. I’ll send you the contacts as soon as possible.

Micheletti replies:

Very well. Please let me have the details as soon as possible, today and tomorrow the Interpol leaders are abroad but knowing them, I am sure that already Wednesday we will be critical with the times. I am waiting for your news.

Massone:

Mr Micheletti,
Some news that I will tell you […] after a brief meeting with the Minister, the designated persons will be the person in charge of relations with Interpol and the head of the Hawks (Special Investigative Unit). From there to meeting the Commissioner […]. I asked for exact names and contact details to coordinate the logistics.  I will send them to you as soon as I receive them. One of the important terms is Public Order Policing and the issue of non-lethal weapons is very important to position Beretta.
They have received specific instructions from the President to withdraw and replace the ‘RS’.

Micheletti:

Dear Mr Massone
Thank you for your message that I will send to Interpol, you will forgive me if I am anxious to receive detailed information. […]

Massone:

Thank you Mr Micheletti.
No problem – I am uncomfortable because I am only an intermediary and these gentlemen are very structured and diligent […]. Right now, they are also obsessed with wiretapping (it’s been a year trying to take out the Commissioner). So much in fact they had to go to meet at the airport to be able to talk and this certainly does not speed things up.

Massone again:

Here we are finally Mr Micheletti.
Logistics and various protocols are to be defined with Mr Molate Moremi, who leads the secretariat of the Minister. Contacts: +27 (0) 76*02*01*
Participants in the meeting, after the meet and greet with the Minister:
Gen. Zuma (not related), head of special projects
Gen. Scotts Naidoo, head of Interpol in SAPS
Gen. Ntlemeza, head of Hawks, the Special Investigation Unit
Mr Mandla Kanozulu, advisor to the Minister
Mr Moremi.
I hope this is efficient. I am at an offsite with the Minister and this Moremi is there too, I will pressure him so that he immediately responds to the Interpol contact. Please warn me if he doesn’t respond quickly.

Micheletti:

I spoke at this moment with Interpol Rome.
Authorisation has started thanks to your information, I will shortly communicate the list of people who make up the Italian delegation with the arrival volumes, The doctor in charge of the Interior Ministry asks me if we can suggest the name of a hotel possibly close to the place of the meeting. Which I imagine will be the Ministry of the Interior or the Directorate of SAPS.  Thanks again for your precious collaboration, I am convinced that with your help we will complete this ‘enterprise’.

Massone:

Great, thanks to all. I think the best thing is the Sheraton in Pretoria. Very central and good standard, known by all. See you soon, Vittorio

Micheletti:

Doctor,
Here is the answer for the hotel, I am waiting for the names and flights to be communicated to Pretoria.

Massone:

Dear Dr. Micheletti,
I think the hotel is fine.  Let me know if it is possible to book three rooms (in this regard I would be grateful to know the rates applied) for the Italian delegation which will be composed as follows:
Prefect Antonio Cufalo, Deputy Director General of the Security Police-Central
Director of the Criminal Police Executive General of Public Security dr Filippo Dispenza Ministerial Consiglieri for International Co-operation/Affairs
Senior Executive of the State Police dr, Gennaro Capoluongo, Director of the International Police Cooperation Services. […]”

Micheletti:

Dear Dr Massone,
Attached is the reply from the Italian PS, as seen by the delegation and at the highest level and is composed of the Deputy Chief of Police and Chief of Criminal Police, the General Manager for international co-operation and the head of INTERPOL Itala. The Italian PS will not contact SAPS directly so please send the names for the hotel accommodation. It would be interesting to know if the programme is available; alternatively, I can contact me by mail but there is confusion, for example, if the SAPS will have a conversion at the Sheraton Hotel.
Thanks again for the assistance […]”

Masson then emailed who I assume was his secretary, and says:

Sharlene
We need to organise this visit for the Italian Interpol
– Call Moremi, mail and number below at SAPS. If you don’t get quick reply, Mandla KaNozulu.
– Give them names and flights, they won’t contact him directly, they’re using us.
– They need a protocol at arrival, transport to Pretoria and help with reservations at a hotel there, where there’s an agreement with SAPS.
– They also need an agenda for the trip […].

The correspondence is startling. Its references to wiretapping and attempts to “take out” the Commissioner are disturbing. The correspondence seems to suggest there may have been a rushed attempt to push through this meeting to discuss (presumably amongst other issues) the provision of firearms by Beretta to South Africa. Massone’s email referencing “Public Order Policing and the issue of non-lethal weapons” as being “important to position Beretta” appears to indicate an intention to discuss procurement of non-lethal or less-lethal firearms outside of formal procurement channels. If that was indeed the case, that provided fertile ground for corruption. Why Interpol’s attendance, and the attendance of the high-level Italian delegation was necessary for this purpose escapes me.

A further noteworthy aspect is the repeated reference to, and intended presence at the meeting of Mandla Kanozulu. Kanozulu was one of the co-owners of Ambrobrite, an events management company that Bain mysteriously contracted with allegedly for business development services.

Ostensibly, Ambrobrite was to aid Bain’s business development strategy as it pursued “the government and state-owned enterprises as a strategic priority”. But that was patently a cover for an alternative, undisclosed agenda. Ambrobrite was a strange choice for a supposed business development partner. According to Bain’s own due diligence, the company (which specialised in event management) had no internet presence, no financial statements, a tax certificate suspected by SARS to be fraudulent, no discernible trading history, and was headed by two artists.

Mr Duma Ndlovu and Kanozulu. The answer, then, as to why Bain partnered with Ambrobrite clearly does not lie in the company’s business development capabilities. It had none of those. But what it did have were political connections. Significantly for this story, Kanozulu was an ‘advisor’ to the Minister of Police.

The Commission’s report cast Ambrobrite as a front used for its political connections in securing work for Bain at SARS. It did not; however, assess the connection between Ambrobrite, Kanozulu, the Minister of Police, and this alarming arms-related meeting scheduled for 30 September 2015.

To my mind, this e-mail chain suggests that Ambrobrite’s political connections may also have been used to facilitate the meeting with Beretta.

Whether this was one of the intentions from the inception of the Ambrobrite-Bain relationship is unclear. The email chain raises more questions than it provides answers. Why was this meeting organised at all, and why was it organised through Bain? If SAPS simply needed to enquire about non-lethal or less-lethal firearms, it should have followed normal and lawful procurement processes. Were Massone, Bain, Moyane, Kanozulu, or others intending to secure kickbacks from the ‘procurement’ of firearms or from other illicit trade? Was that why the meeting was organised outside of procurement channels?

Was this one of the reasons why the destruction of the PEMTS’ investigative capacity was so ruthlessly pursued, so that it would not have the capacity to investigate the flow of funds in transactions such as the one potentially envisioned here? The available facts cannot establish the true intention of the meeting but they do raise troubling questions. These questions require urgent attention. The meeting – assuming it happened – appears to have been irregular on almost every front, and a legitimate basis for it seems impossible to find. As Williams explained in his evidence, he could think of no reason that Bain would have been involved in this meeting. On the surface, and absent further investigation, it seems to suggest that state capture may run deeper than we think; controlled or influenced by the dictates of both national and international economic and criminal interests.

As for Massone: he has left Bain but that is cold comfort. He appears to have graduated from managing partner at Bain to vice president of a company called Alkemy SPA, an Italy-based company with branches in 17 countries including South Africa. Bain and Massone have demonstrated an astounding lack of transparency and a flagrant disregard for the country’s Constitution and its laws. That we are allowing Bain to continue, under the present circumstances, to operate in South Africa, and that Massone still has connections to the country through his latest employer, is cause for great concern.

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