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Former British MP and anti-apartheid activist Peter Hain has called on the UK to freeze all government contracts with US-based consulting firm Bain & Company after the release of the state capture report.
In a letter sent to the British government, Hain said all contracts with the UK government should be frozen subject to the firm complying with SA’s National Prosecuting Authority (NPA). Bain was also the subject of a damning finding from another inquiry in 2018, chaired by retired judge Robert Nugent, which said the consultancy had failed to be forthcoming about its role in the destruction of the SA Revenue Service (Sars).
“I therefore find it completely unacceptable that Bain & Co is licensed to operate commercially in the UK and is endorsed by your government by contracting for work with government departments and public sector bodies,” Hain said in a letter to UK Prime Minister Boris Johnson this week.
Bain has denied the findings of the state capture report, saying that though it had “made mistakes” in its work with Sars, it did not wilfully support state capture at the revenue service or elsewhere.
In the report, which was released on Tuesday, the commission’s chair, acting chief justice Raymond Zondo, recommended that all state contracts with Bain be re-examined for regulatory compliance. This is after the inquiry found that the firm played a central role, along with former president Jacob Zuma and former Sars commissioner Tom Moyane, in the decline of the tax collection agency, rendering the institution dysfunctional.
The report found that Zuma and Moyane worked with Bain to restructure Sars and other state-owned entities and to “restructure entire sectors of the SA economy”.
“The commission’s recommendation is a startling one, which confirms the deep concern the SA authorities have had about Bain’s despicable activities in that society,” Hain said.
According to the report, the work of capturing Sars by Bain, Moyane and Zuma began in 2013 when the firm entered into a business development and stakeholder management contract with events business Ambrobrite. The company, which had no trading history and had not filed any financial statements, was led by prominent entertainment industry businessmen Duma Ndlovu and Mpumelelo Ngema.
The aim of the Bain-Ambrobrite relationship, which cost the revenue service nearly R11m over three years, was to facilitate the introduction of Bain partners to key leaders and decisionmakers, particularly within state-owned enterprises (SOEs). Bain’s use of an events management company for this purpose, however, was bizarre, according to former Bain employee and whistle-blower Athol Williams.
He told the Zondo commission that the real intent of Bain and Ambrobrite’s relationship was for Bain to “take advantage of Ambrobrite’s proximity to Zuma and other senior politicians and to use that to their advantage to gain nonpublic information for their commercial advantage. In other words, to gain access to consulting opportunities that took advantage of those relationships,” Zondo said in the report.
Ambrobrite also organised parties and meetings, which were attended by senior SA politicians and senior Italian police officials, according to the report.
The report also found that Bain was immediately hired as consultants to Sars once Moyane was appointed as commissioner in 2014, where, under his leadership a culture of mismanagement, fear and intimidation became the norm, said Zondo.
The inquiry also wants law enforcement to probe all Bain contracts with the state to enable the NPA to prosecute those guilty of crime.
Williams said he is vindicated by the findings of the report. However, unless the NPA is strengthened, the body will be unlikely to adequately prosecute those responsible for state capture, he said.
He said though the lid has been lifted on the extent of state capture, his and the lives of other whistle-blowers continues to be in danger.
He said that though there had never been any direct threat to his life, he had implicated 39 people, adding that the government does not offer protection to whistle-blowers.
Bain repaid the tax agency R217m which included the fees it received plus interest.
Bain initially applied to cross examine Williams but later withdrew its application because it did not want to comply with Rule 3.3 of the Commissions Act, which requires any implicated party to give the full version of their account, Zondo said.
Zondo found that the conduct of Zuma, Moyane and Bain was a clear example of how the private sector colluded with the public sector to advance the state capture project.
“Sars was systemically and deliberately weakened, chiefly through the restructuring of its institutional capacity, strategic appointments and the dismissal of key individuals, and a pervasive culture of fear and bullying. It is a clear example of state capture,” he said.
Updated: January 6 2021This article has been updated to include comment from Bain & Company.
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.