EDITORIAL: Bain was right to quit Business Leadership SA

Global management consultancy Bain & Co did not have much choice other than to withdraw from Business Leadership SA (BLSA). It has done the right thing, saving BLSA from having to expel it in the face of a relentless campaign by former partner Athol Williams.

The Zondo commission implicated Bain in the capture of the SA Revenue Service (Sars), relying heavily on evidence by Williams, who was initially found by the Nugent commission to have been less than forthcoming. In an article published in Business Day in 2019, Treasury deputy director-general Ismail Momoniat was critical of Williams’s role in what he said was Bain’s public relations campaign in the wake of the scandal.

Williams later went all out at the Zondo commission to give an extensive account of Bain’s relationship with former president Jacob Zuma and its work for former Sars commissioner Tom Moyane. It was work that profoundly damaged Sars.

In its statement this week, Bain said Williams had no first-hand knowledge of these events. It insisted that its work for the tax authority was a “mistake” for which it was deeply sorry. And it cited the findings of an “independent investigation” by a law firm it had appointed that concluded that it had intended no harm to Sars.

Yet Bain cannot undo the damage it did to the institution, even though it has paid back the money it earned from Sars. It is hard to see how it can restore its reputation, with both retired judge Robert Nugent and acting chief justice Raymond Zondo making it clear that it had failed to co-operate in transparency about its misdeeds, though in its statement it said Zondo seemed not to have considered its affidavits.

Big firms

It is worth putting the Bain-BLSA saga in perspective. BLSA is simply an elite club of businesses who apply or are invited to join, and are willing to pay the steep fees. It is not in any way a representative business organisation, as is Business Unity SA. It does much lobbying and good work on business’ behalf, but there is no particular reason it needs Bain — or Bain needs it.

BLSA’s members include a handful of multinationals, with a bunch of big professional services firms. Unsurprisingly, McKinsey, Eskom and Transnet are no longer members.

This is where a broader perspective is needed, especially in a week in which Deloitte has come under renewed fire for its role in auditing Tongaat Hulett.

One of the disturbing aspects of state capture was the extent to which it embroiled many highly regarded professional firms and consultancies. They were often greedy and stupid, rather than necessarily malign in intention. But the effect was the same — they helped to enable corruption or give a stamp of respectability to the capture of institutions that were key to the health of the economy.

That ranges from the work KPMG did to legitimise Moyane’s “rogue unit” story, to PwC’s audit of SAA. Add to that McKinsey’s role at Eskom and Transnet in the era of state capture, with others including Hogan Lovells and SAP.

Reputations damaged

All of these were global firms that should have had high standards of ethics, integrity and probity. They did not live up to the trust the public, shareholders and clients placed in them. In the case of some of the big four audit firms, they were entangled in private sector scandals that lost investors billions of rand.

Steinhoff, Tongaat and the failed African Bank were all Deloitte audit clients; SAA was a PwC audit client; fraudulently failed VBS Mutual Bank was a KPMG audit client, as indeed were the Guptas. The reputations of these firms, and of these professions, were severely damaged.

For BLSA, the important work to be done is not arguing who should or should not be members. Rather, it must keep up the pressure on its members to build a culture of ethics and integrity within their own ranks.

Five years ago it led an integrity campaign, “Business Believes”. Time to dust off those pledges and turn them to reality.