Bain hits back at scathing Zondo report

play article
Subscribers can listen to this article
Justice Raymond Zondo. (File photo by Veli Nhlapo/Sowetan/Gallo Images via Getty Images)
Justice Raymond Zondo. (File photo by Veli Nhlapo/Sowetan/Gallo Images via Getty Images)

  • The State Capture Inquiry’s report has been scathing about the role US management firm Bain & Company played at the SA Revenue Service.
  • It recommends that Bain be investigated by the authorities.
  • But Bain says it mischaracterised the role it played at SARS and that the report relied heavily on the testimony of one witness who admitted to having "no first-hand knowledge" of Bain's work at SARS.

The US management consultancy Bain & Company said the first part of the State Capture Inquiry's recently released report mischaracterised the role it played at the South African Revenue Service (SARS).

The first of three parts of the final report was handed over to President Cyril Ramaphosa at the Union Buildings in Pretoria on Tuesday.

The report recommends that law enforcement agencies investigate Bain, "with a view to enabling the National Prosecuting Authority to decide whether or not to initiate prosecutions" related to the awarding of contracts from SARS to the group. Additionally, given Bain's "unlawful" role in SARS, the report recommends that all Bain's contracts with state departments and organs of state be re-examined for regulatory and constitutional compliance.

The report found that Bain knew about the appointment of former commissioner Tom Moyane before it was announced, and that Bain's former managing partner Vittorio Massone had frequent meetings with former president Jacob Zuma. The inquiry found that Bain and Moyane did “detailed planning” of planned restructuring at the tax agency “before they even stepped foot into SARS”.

"Bain met President Zuma and Mr Moyane before they had even been appointed as third-party consultants to SARS, and from an early stage it was obvious that they would be given the position, even though no tender process had even begun," the report found.

The report highlights flouting of procurement legislation in order to extend what was originally supposed to be a six-week contract for around R2.6 million, into one that lasted 27 months and cost SARS around R164 million. (Bain has paid back the money, with interest.)

As part of its work for SARS, Bain was intimately involved in devising a restructuring plan for SARS with Moyane, it found.

"Exactly as the plan had contemplated, specific individuals at SARS were identified and neutralised once Mr Moyane took up his position,” the report found. “This included very senior people who had served the institution well for years."

Zondo says that SARS did not need Bain’s input. “In reality there was no need for consultants, let alone a radical overhaul of what was then a world-class institution."

"The SARS evidence is a clear example of how the private sector colluded with the Executive, including President Zuma, to capture an institution that was highly regarded internationally and render it ineffective."

On Thursday, Bain & Company released a statement saying that it supported the State Capture Inquiry, but found the conclusion it reached where it came to its consulting work disappointing.

"While we remain supportive of the commission and its work, we are disappointed that Part I of the commission's report mischaracterizes Bain's role at SARS. While we made mistakes in our work with SARS, we remain confident that we did not in any way willfully or knowingly support state capture at SARS or elsewhere," the statement said.

The statement said there were no new facts considered in the report and that it relied heavily on the affidavit and testimony of one witness who admitted to having "no first-hand knowledge" of Bain's work at SARS, a veiled reference to former Bain partner Athol Williams' testimony to the commission in March last year.

"Bain submitted two detailed affidavits to the Commission, neither of which appear to have been factored into the report," the statement said.

In its report, the State Capture Commission expressed appreciation for Williams, saying that he "rejected numerous attempts from Bain & Co. to give him large sums of money in return for his silence".

Get the biggest business stories emailed to you every weekday.

Go to the Fin24 front page.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Brent Crude
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot