Call for South Africa to ban consultancy for its dodgy work at SARS

The Helen Suzman Foundation (HSF) has called on the government in South Africa to follow the lead of its adversaries in the UK and ban consultancy Bain & Company for the role it played in facilitating the capture of the South African Revenue Service during the Jacob Zuma years.

The global consultancy was this year found by a South African judicial commission to have had links with corruption in the country under the presidency of Jacob Zuma, specifically in work restructuring the national tax agency, Bloomberg reported.

The UK government banned Bain & Co from competing for state contracts as a result, and according to lawmaker Peter Hain, it sets an important precedent for the handling of companies found to have assisted with corruption overseas.

Labour peer and veteran anti-apartheid campaigner Hain has long called for repercussions for the firm and other international businesses that were implicated in the practice known locally as state capture, which the government estimates cost the country R500 billion, Bloomberg reported.

“This is an important precedent which I welcome because when this was going on, and Bain in South Africa was doing all this nefarious business and earning big fees in the process, then it was away from global scrutiny,” Hain, who grew up in South Africa, told Bloomberg Radio.

The United Kingdom government can only be applauded for its momentous decision to impose a three-year ban on Bain & Company from receiving work from the UK’s Cabinet Office, said the HSF.

Bain, it said, earned this sanction for its role in the fraudulent restructuring and dismantling of the South African Revenue Services (SARS), one of the most notorious episodes in the “State Capture” period.

“But South Africans must wonder why their own government has taken no equivalent action,” it asked.

The HSF paid tribute to whistleblower Athol Williams and Hain for their efforts in securing the sanction. “We call on the South African government now to adopt similar measures in line with the findings of the State Capture and Nugent Commissions, both of which left no doubt as to Bain’s unlawful and destructive role at SARS.

“The fact that Bain has paid back its fees to SARS is no redress but is a gesture contemptuous of the magnitude of harm it helped cause. The resulting shortfalls in revenue collection significantly set back South Africa’s constitutional democracy and most acutely prejudiced those who are poorest and most vulnerable in South Africa.”

The HSF said the UK’s decision recognises that Bain’s operations in South Africa were no “rogue unit” within its global network of consultancy services, but integrally entwined. “Fortunately, (or unfortunately for Bain) legal mechanisms for accountability are global in reach.”

The foundation said that the UK’s action must only be the first of its kind and Hain has already announced his intention to turn his focus to the United States, where Bain has its headquartersed, to secure further sanctions.

“In South Africa, civil society groups are exploring ways in which US laws like the Foreign and Corrupt Practices Act might be applied to secure criminal penalties against Bain,” it said.

National Treasury’s acting director-general, Ismail Momoniat, called on companies in the private sector in South Africa and internationally not to do business with the consultancy. “In my view, what they did at SARS is akin to treason,” Momoniat told News24.

Bain said the firm is “disappointed and surprised” and would be responding to express concern about the decision-making process before considering other options.

Other international firms have returned earnings for their links to graft in South Africa, notably McKinsey & Co, another global consultancy, and Swiss industrials firm ABB, German IT services firm SAP and auditor KPMG are two others to have been embroiled in scandals in the country during the Zuma era, Bloomberg reported.

Read: UK government bans Bain & Co over links to state capture corruption