Dear President Biden, no reputable government should do business with Bain & Co

11 Sep 2022

‘Until a global corporate like Bain ceases its complicity in state corruption in countries like South Africa, pays back all the considerable fees earned, and the legal and prosecutorial proceedings it is now facing in South Africa are completed, no reputable government should do business with it,’ British politician and human rights campaigner Peter Hain writes in a letter to US President Joe Biden.

Dear President Biden,

This letter follows my exchange in February 2022 with the US ambassador to the UK over the role played by Boston-headquartered US management consulting firm Bain & Co in wide-scale corruption in South Africa and the undermining of that country’s democratic institutions.

In August this year, the UK Cabinet Office instituted a three-year suspension from UK government contracts on Bain & Co, on the basis that the company “is guilty of grave professional misconduct” in relation to its operations in South Africa.

That followed my repeated calls for the UK to take such action after Bain’s despicable and shameful behaviour in colluding with former South African President Jacob Zuma and advising him personally on how to disable the South African Revenue Service (SARS) in pursuance of his corrupt and malevolent purposes.

I urge the US government to similarly institute a ban on Bain working for any public sector organisation in your country, at least until the current judicial process over Bain’s nefarious role in South Africa has completed its full course.

The UK government’s decision follows the findings of two independent judicial commissions of inquiry in South Africa, namely the Nugent Commission chaired by Judge Robert Nugent in 2018; and the Zondo Commission, chaired by Chief Justice Raymond Zondo, which concluded this year.

Both commissions found Bain to have been directly and intentionally involved in dismantling SARS, the country’s tax authority, resulting in its inability to meet the country’s tax revenue targets and the boom of illicit trade with devastating knock-on economic effects.

The commissions described Bain to have been involved in a “premeditated offensive” against SARS and that their involvement was “unlawful”. So concerned with Bain’s involvement in the public sector was the Zondo Commission that it recommended a review of all Bain’s South African public sector contracts with a view to prosecution in its final report.

Bain’s transgressions in South Africa have led to it being the subject of a US Department of Justice investigation as well as investigations by the South African National Prosecuting Authority (NPA) and the Special Investigating Unit (SIU). Its close relationship with Zuma placed it in the same network as his notorious associates, the Gupta brothers, whom the US Treasury sanctioned for corruption in October 2019.

Bain’s US-based global managing partner, Manny Maceda, underplays his company’s actions at SARS as “mistakes”. But that contemptuously belittles the immense social and economic damage Bain’s behaviour has caused ordinary South Africans already suffering from crippling inequality and poverty under apartheid, as well as the industrial-scale looting and cronyism during the Zuma decade in which Bain was complicit.

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‘Deliberate strategy’

As evidence presented at both judicial commissions showed, Bain’s relationship with Zuma followed a deliberate strategy endorsed by Bain’s global leadership — to court favour with Zuma through known Zuma-affiliates, paid by Bain, who themselves are the subject of ongoing investigations in the US and South Africa.

Yet Maceda wants to lay the blame on the former head of Bain’s local office, Vittorio Massone, and claim that with his departure, it has now cleaned out its stables. Nothing is further from the truth.

At least 60 Bain employees were involved, including four senior Bain officials currently based in the US, namely (with current office location in brackets): Onyinye Ibeneche Avbovbo (Boston), Eric Maltiel (San Francisco), Bjorn Matthews (Dallas) and Richard Wilson (Denver).

As news of Bain’s involvement broke, Bain cynically simply shuffled its staff out of South Africa to its global offices. Fabrice Franzen, the partner who ran the day-to-day maliciously destructive work at SARS, remains at Bain and is now based in the Middle East. So, too, is the partner Stephane Timpano, who prepared most of the materials presented to Zuma. Massone, who had been promoted to run Bain’s Middle East operation, was paid to leave the firm after a three-month negotiation.

To this day, at least 20 senior people remain at the firm who were in some way involved in the South African business at the time of the collusion with Zuma.

Not only were senior US and UK Bain managers complicit in South Africa’s decade of corrupt State Capture, but they are also trying everything possible to cover it up. That has included punishing and seeking to discredit one of its former senior partners, Athol Williams, who provided valuable evidence to both judicial commissions and to the UK Cabinet Office, and was explicitly praised by the Zondo Commission.

Part of Williams’s evidence has called into question the validity of Bain’s internal investigation, conducted by US law firm Baker McKenzie, whose full findings Bain failed to make available to both the Nugent and Zondo judicial commissions, prompting them to accuse Bain of failing to cooperate as it should have.

‘Polished advertorials’

Despite widespread appeals for Bain to make a full disclosure of its shabby role during the Zuma/Gupta era, it has continued to withhold this evidence, choosing instead to publish polished advertorials in newspapers.

While Maceda states that Bain is committed to ensuring their “mistakes” are not repeated, he is silent on any commitment to make amends. Although it has repaid the fees it earned from SARS, it has not repaid the much larger proportion of its fees earned through other questionable contracts with corrupted state-owned enterprises, and has certainly made no amends to the institutions and people it harmed.

I find it disturbing that a company of Bain’s stature is deemed to have “colluded with the [South African] Executive, including President Zuma, to capture an institution [SARS] that was highly regarded internationally and render it ineffective”, as stated by the Zondo Commission, which concludes that Bain’s involvement with Zuma and SARS is “one of the clearest demonstrations of State Capture”.

Until a global corporate like Bain ceases its complicity in state corruption in countries like South Africa, pays back all the considerable fees earned, and the legal and prosecutorial proceedings it is now facing in South Africa are completed, no reputable government should do business with it, certainly not in the US where Bain senior executives are up to their necks in both that complicity and subsequent cover-ups of it.

I am therefore appealing to you to act on this matter and establish a clear precedent that will signal to all US global companies, consultancies, lawyers, auditors and financial advisers that collusion with corrupt politicians and their business cronies in other countries will not be tolerated.

Yours sincerely,

Peter Hain DM

Lord Hain is a member of the House of Lords. He is a former anti-apartheid leader and UK Cabinet minister.

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South Africa

‘Deliberate strategy’

‘Polished advertorials’