Chemicals and energy giant Sasol is sticking by Bain & Co for now – despite South Africa’s government being the latest to ban the US-based management consulting firm from tendering for public sector contracts because of its role in State Capture.
South Africa’s government has joined its counterpart in the UK by banning Bain from tendering for state contracts for 10 years because of its “corrupt and fraudulent practices” at the SA Revenue Service (Sars).
There are increasing calls for private sector companies to follow suit and stop working with Bain. Such calls have come from Peter Hain (a veteran anti-apartheid campaigner) and Ismail Momoniat (National Treasury acting director-general), who have argued that Bain has not come clean about the full extent of its work at Sars, which the pair have likened to “treason”.
But Sasol, one of the largest companies in South Africa that have hired Bain for its services, didn’t say if it would ditch the firm or impose penalties now that two governments have done so.
Instead, Sasol told Business Maverick that it remains “open to reconsidering” its decision to use Bain as a service provider “should any new factors emerge that were not previously considered by Sasol”.
It’s not known what these “new factors” might be. For now, Bain remains in Sasol’s fold.
Sasol suspended Bain as a service provider in 2018 following the release of the Nugent Commission of Inquiry into tax administration and governance at Sars. The inquiry found that there was a “premeditated offensive against Sars”, strategised by Bain’s South Africa-based office to allow former Sars commissioner Tom Moyane to seize the tax agency.
In 2014, Moyane awarded Bain the tender to restructure Sars’ operations, including overhauling its IT infrastructure and changing its organisational/governance structure.
Bain’s restructuring destroyed key Sars units, including its large business centre, legal and compliance units, and enforcement capacity. About 200 senior managers were displaced, and several skilled employees left Sars, weakening its world-class capacity to collect tax revenue.
Vittorio Massone, the former South Africa head and managing partner of Bain, enjoyed enormous proximity to power; he met former president Jacob Zuma at his homestead in Nkandla around 2013 at least 12 times, and was informed that Moyane would be appointed Sars commissioner before this was made public. Even Bain’s bid for the Sars tender was found to have been engineered to automatically favour the firm, owing to its proximity to Moyane.
In 2020, Sasol readmitted and reemployed Bain into its database of service providers following the former’s due diligence process, saying that Bain had remedied and strengthened its internal governance and risk processes.
Sasol also believed that Bain had atoned for its behavior after paying back the fees it had earned (amounting to R217-million plus interest) for its sloppy work at Sars.
Visit Daily Maverick's home page for more news, analysis and investigations
Sasol’s further support of Bain
Sasol even stuck with Bain after the Zondo Commission of Inquiry made damning findings about Bain’s involvement at Sars and high-level corruption when the inquiry released its report in January 2022.
Read more in Daily Maverick: “Five things to know about the State Capture Commission’s findings and recommendations on SARS”
Sasol also continued doing business with Bain after the UK government slapped the firm in August 2022 with a three-year ban from receiving public sector contracts because of its “grave professional misconduct” in South Africa.
https://www.dailymaverick.co.za/article/2022-08-03-uk-bans-bain-from-state-contracts-for-3-years-over-state-capture-work-in-south-africa/
At the time, Sasol said it would study the decision by the UK government. Sasol later decided that it would not drop Bain because it was “satisfied” that there were “no additional factors that were considered by the UK Cabinet Office that were not previously considered by Sasol”.
Bain has doubled down on its innocence, saying it disagreed with the decision by South Africa’s government and National Treasury to ban it from public sector contracts.
“There is no evidence that Bain colluded with Sars or engaged in any corrupt and fraudulent practices,” Bain said in a statement.
Bain said while it was aware of the Sars tender before it was issued formally, the firm has found “no evidence, nor has any been produced, that Bain manipulated the procurement process in any way to exclude other bidders or specifically advantage Bain”.
The company also said it was weighing its options, as it was blacklisted by South Africa’s government without notice or being offered an opportunity to defend itself. DM/BM