Bain consultancy banned from government work over 'misconduct'

Management consultancy Bain has been banned from government contracts for three years over its involvement in a South African corruption scandal.

The government cited "grave professional misconduct" for the move.

The firm said it was "disappointed and surprised" by the decision but acknowledged it had made "mistakes".

The move follows a probe into allegations of widespread corruption during South Africa's former President Jacob Zuma nine years in power.

The former president has been accused of placing the interests of corrupt associates ahead of those of his country, in a type of corruption known as "state capture".

In the South African government's investigation, Bain was found to have had links with corruption in the country as part of its work for the national tax agency.

The 2018-2022 South African Government Commission, called the Zondo commission, after Raymond Zondo, who currently serves as Chief Justice of South Africa, concluded Bain acted "unlawfully" and, along with other private sector companies, colluded in "the clearest example of state capture".

Bain was accused of undermining the South African Revenue Service (Sars) through consultancy work that allegedly benefited Mr Zuma's allies.

A spokesperson from the Cabinet Office said that after reviewing Bain's role and taking account of the "evidence and conclusions of the South African Government Commission", the Minister for Government Efficiency, Jacob Rees-Mogg, considered Bain to be "guilty of grave professional misconduct".

"This decision has been taken in light of Bain's responsibility as a global brand for its South Africa division and the company's failure to clarify the facts and circumstances of its involvement," the spokesperson added.

Bain said it had "apologised for the mistakes" its South African office made in its work with Sars and that it had repaid all fees from the work, with interest, in 2018.

But the management consultancy said it had not acted illegally at Sars or elsewhere "and no evidence to the contrary has been put forward."

Labour peer and veteran anti-apartheid campaigner Peter Hain said he believed that the alleged role Bain played in assisting the damaging of Sars, was "sufficient for precluding Bain from engaging in work at public institutions".

The US-based firm has been awarded UK government contracts worth up to £63m since 2018 and London is its second-largest office.

Lord Hain said he was pleased by the decision.

Global corporates like Bain, he said, had to "feel the pain for the consequences" of their behaviour in South Africa's "state capture and corruption scandal" under former President Zuma.

"Otherwise other corporates will be tempted to do the same," Lord Hain told the BBC.

In a speech to the House of Lords last month, Lord Hain, under parliamentary privilege, said Bain had "brazenly assisted" Mr Zuma to organise his decade of "shameless looting and corruption". Lord Hain said the firm had earned fees estimated at £100m from state institutions during this period.

"Bain used its expertise, not to enhance the functioning of a world-renowned tax authority as Sars was acknowledged, but to disable its ability to collect tax and pursue tax evaders, all in the service of their corrupt paymasters."

"The very company who possessed the expertise to bolster South Africa's defences against the ravages of state capture, in fact weakened these defences and profited from it," Lord Hain added.

After raising the issue with former Prime Minister Boris Johnson, Lord Hain received a letter from his office in January affirming that the Cabinet Office had been asked to "look into this matter with urgency".

In another letter also seen by the BBC, the American Ambassador in London promised to share Lord Hain's concerns with relevant parties in Washington.

Athol Williams, a South African whistleblower formerly employed by Bain, testified at the Zondo Commission's state inquiry into corruption allegations and left the country saying he feared for his life.

In response to the decision, Mr Williams, a former ethics lecturer at the University of Cape Town, said that this external confirmation of Bain's misconduct "raises the urgency of the Zondo Commission's recommendation that all Bain's public sector contracts be investigated with a view to prosecution".

"SA has taken a big step forward today in our fight against corruption, state capture and predatory companies, a fight that I consider our new liberation struggle."