Bain banned from UK state contracts for ‘serious misconduct’ in S Africa

Bain & Co, the Boston-based global management consultant, was hit on Tuesday by a three-year ban from bidding on UK government contracts for “serious professional misconduct” in a major corruption scandal in South Africa.

Jacob Rees-Mogg, Cabinet Office Secretary, told Bain that the incident put the integrity of the company in “question” and that he did not believe the company had performed its role in the scandal “enough” serious”.

Britain is the first Western country to impose such penalties on Bain for its role in the “state occupation” scandal in South Africa, and there has been pressure on the United States to comply.

In a letter seen by the Financial Times, Rees-Mogg told James Hadley, Bain’s managing partner in the UK, that the three-year ban will be reinstated as of January 4, 2022.” I am confident that after three years have passed, Bain & Co will restore its reputation,” he wrote.

Rees-Mogg’s intervention came after pressure from Lord Peter Hain, the veteran anti-apartheid campaigner, who urged Boris Johnson’s government to punish Bain for his “despicable conduct” ” its.

Initially, Cabinet Office officials advised that no action was needed against the company but Rees-Mogg sought further advice, including from an outside QC.

He told Hadley that the company would be barred from entering into Cabinet Office contracts under the 2015 law on the grounds that “Bain & Co is guilty of serious professional misconduct that undermines the integrity of the company.” suspected”.

Rees-Mogg, who will advise all government agencies to apply the same three-year ban, said he was particularly concerned about how Bain’s South Africa division “colluded” with the former president’s regime. President Jacob Zuma to undermine the country’s revenue service.

The consulting firm has been awarded UK public sector contracts worth up to £63m since 2018, including £40m Brexit advisory work for the Cabinet Office, but losses The damage to the company will be mainly in terms of reputation.

In a February letter to Hain, then Cabinet Office Secretary Steve Barclay wrote that the company “is not a strategic supplier to the government and is not currently undertaking any significant work.” for the government”.

Hain said: “I am very satisfied. This sets a marker for all companies operating in such an illegal, unethical and unprofessional manner that they will not be able to bid for government contracts.

“I commend Jacob Rees-Mogg for doing this and I want the US government to do the same.”

“We are very disappointed and surprised by the Minister’s decision,” Bain said. . . We will respond to express our concerns about the process and its results and address inaccuracies in his letter.

“If necessary, we will consider other options to consider and decide. In the meantime, we will continue to work with the Cabinet Office to ensure that we do what is required to restore our standing with the UK government.”

Earlier this year, an investigation into South Africa’s biggest post-apartheid corruption scandal found that Bain had helped undermine the country’s revenue service through his advisory work supporting the country’s allies. Zuma.

The investigation said Bain’s work in restructuring the collection service in South Africa was “a clear example of how the private sector colluded” with the breakdown of public institutions.

It added that Bain had sought to use its relationship with Zuma to acquire government business.

Bain has previously admitted to failures in its work in South Africa and refunded the fees, but said the findings of the investigation misrepresented its activities. Zuma has denied any involvement in corruption.

Other international consulting firms have been embroiled in corruption scandals in South Africa.

In 2020, McKinsey agreed to reimburse around Rs 650 million ($39 million) for irregularities in the contract it signed with a local partner at government-owned companies.

The KPMG auditor apologized in 2017 for “mistakes” in his work against businesses linked to the Gupta family, accused of serious corruption through his relationship with Zuma.

British public relations firm Bell Pottinger has been brought down by its work for Guptas, leading to accusations that it has caused racial tensions in South Africa.

Banning a company from bidding for public sector contracts is rare. Security group G4S was temporarily banned in 2013 after the government overcharged the electronic tagging of criminals, some of whom have died or are still in prison.

Consulting firm Deloitte stopped advertising for the job for six months in 2016 after a leaked note in which its consultants criticized the government’s Brexit strategy.

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