Bain & Co: ulterior motives for Sars revamp possible
The restructuring at Sars has emerged as a key factor that felled its capacity to collect revenue
International consultancy Bain & Co admitted that it could have been "used" for "other" purposes during the R164m restructuring of the SA Revenue Service (Sars), in a contract which was allegedly awarded irregularly.
The restructuring at Sars has emerged as a key factor that felled its capacity to collect revenue — required to finance state spending — contributing to a shortfall of R49bn during suspended commissioner Tom Moyane’s tenure, according to evidence presented at the commission of inquiry into governance at the tax agency chaired by retired judge Robert Nugent.
The second round of evidence focused on how Bain conducted its work.
Bain SA’s managing partner, Vittorio Massone, admitted to the commission on Wednesday that the firm had consulted only 33 employees over six days before presenting a diagnostic report on overhauling Sars — a 14,000-strong organisation that took about 20 years to build. This was in January 2015 and the list of those the consultancy interviewed was provided by Moyane, who had no tax experience and had only taken up the vital post in October 2014.
Massone’s response to much of the grilling by the commissioners was either "yes" or "I don’t know".
The commission heard from Massone that in "hindsight" it appeared that the restructuring could have been used for ulterior motives.
"With the benefit of hindsight I think we can understand that there was an intent there, I can see now having read the transcripts, you can see how we [Bain] might have been used."
Evidence leader Carol Steinberg then questioned Massone, saying the allegation emerging from submissions from Sars officials was that Bain "came in with a script".
"These consultations were very few, very superficial, no one was actually interested in answers because there was a predetermined script and that script was to fundamentally restructure this organisation one way or another to turn it on its head, is that correct?" she asked Massone.
Steinberg put it to Massone that the consultation had been with junior officials, those not in leadership positions, and had lasted for very short periods of time; with one example of a 12-minute interview with a crucial official in enforcement — among Sars’s finest units, but which was wiped out during the restructuring.
Questioning Massone, the commission also heard that the consultancy had not interviewed any senior Sars officials involved in its modernisation process. Steinberg said Bain and Sars had proceeded with a restructuring, which should have taken years, and finalised it within a few months.
The commission questioned Massone about the overconcentration of power its restructuring had handed to former head of individual and business taxes Jonas Makwakwa.
Steinberg expressed shock that Massone did not even know that Sars had a head of customs — he had earlier claimed that it did not have one — which was why Bain had failed to consult that individual. Massone said that Bain’s and his intent had not been to destroy the tax agency, but to improve its functioning.
It also emerged that while Bain had presented four options for the organisational redesign, Moyane had insisted on changes to these, against the firm’s advice, and eventually a fifth version, and possibly a sixth, was adopted.