Bain & Co replaces SA head and offers to repay Sars fee
The consultancy’s managing partner Vittorio Massone steps down
Consultancy Bain & Co has replaced its SA head and offered to pay back money earned for work done at the SA Revenue Service (Sars), which it admits was used for a “different agenda” than originally intended.
Bain, one of the top three global consulting firms, said in a statement on Sunday that managing partner Vittorio Massone has stepped down and that it does not want to benefit financially from the work, for which it was paid R164m.
The firm has become the latest multinational to be embroiled in state capture. It was contracted, allegedly via an irregular tender process, to overhaul the structure of Sars under suspended commissioner Tom Moyane when he took over in 2014.
The commission of inquiry into governance and administration at Sars, chaired by retired judge Robert Nugent, has heard how the increase in VAT for the first time in two decades — which has hit the economy and the poor hard — was necessary partly by the revenue shortfall of R50bn by Sars in 2017-18.
The inquiry has heard evidence from dozens of former and current Sars officials indicating that the Bain restructuring caused the depleted capacity at the tax agency, which led to the revenue shortfall.
The Bain restructuring neutralised key units in the organisation, such as enforcement, the large-business centre, litigation and compliance.
The consultancy conducted only 33 interviews over six days to conclude the work on restructuring the complex tax agency, which took two decades to build from scratch. Those interviewed were handpicked by Moyane.
Massone, Business Day understands, met former president Jacob Zuma twice at his private residence at Nkandla in 2013 and 2014 and has admitted to the inquiry that Moyane asked him for a presentation on the tax agency, which he delivered a year before the now suspended commissioner was appointed by Sars.
This raises questions about whether Massone was complicit in the alleged project to neutralise Sars, which current and former officials have raised before the Nugent inquiry.
Massone stepping down marks a shift from his stance during public hearings by the commission, which concluded a week ago.
During those hearings, Massone was defiant, defending his work at Sars, saying he did not think the changes he recommended to the large-business centre, for instance, had been a mistake. This is despite evidence put to him, which indicated that the changes were unnecessary and damaging. He also told the commission that he did not believe he needed to apologise to taxpayers during the hearing.
In the statement, Bain said it was “deeply troubled” by the pain suffered by Sars employees and revealed that its internal investigation is being conducted by international law firm Baker McKenzie.
“We have learnt in the first week of the investigation that our engagement with Sars fell short of our operating principles. In addition, we do not want to benefit from work that was used to further a different agenda than was intended,” Bain said.
The R164m, plus VAT, it earned would be set aside and used as prescribed by the Nugent inquiry or in the absence of direction from the commission would be used for “the benefit of SA”.
It would consult business, the government and civil society on what to do with the money if Nugent’s findings were silent on this, it said.
Bain has appointed Tiaan Moolman, a Bain partner, to run its SA operations and has established a committee to oversee its internal investigation into the Sars contract, chaired by its senior global partner, Athol Williams.
Bain launched its internal inquiry last Sunday after the Nugent inquiry heard damning evidence of how its work had damaged Sars’s capacity to collect revenue and after media inquiries about Massone’s link to Zuma and Moyane.