Bain barred from UK authorities contracts for ‘grave misconduct’ in S Africa

Bain & Co, the Boston-based world administration marketing consultant, was on Tuesday hit with a three-year ban from tendering for British authorities contracts due to its “grave skilled misconduct” in a significant corruption scandal in South Africa.

Jacob Rees-Mogg, Cupboard Workplace minister, advised Bain that the affair had rendered the corporate’s integrity “questionable” and that he was not satisfied that it had taken its position within the scandal “sufficiently significantly”.

Britain is the primary western nation to impose such penalties on Bain for its position within the “state seize” scandal in South Africa and there may be already strain on the US to observe swimsuit.

In a letter seen by the Monetary Occasions, Rees-Mogg advised James Hadley, Bain’s UK managing accomplice, that the three-year ban would apply retrospectively from January 4 2022. “I belief that after three years have elapsed Bain & Co may have restored its fame,” he wrote.

Rees-Mogg’s intervention got here after strain from Lord Peter Hain, the veteran anti-apartheid campaigner, who had urged Boris Johnson’s authorities to punish Bain for its “despicable” behaviour.

Initially, Cupboard Workplace officers suggested that no motion towards the corporate was crucial however Rees-Mogg sought additional recommendation, together with from an exterior QC.

He advised Hadley that the corporate could be banned from Cupboard Workplace contracts beneath 2015 laws on the idea that “Bain & Co is responsible of grave skilled misconduct which renders its integrity questionable”.

Rees-Mogg, who will advise all authorities departments to use the identical three-year ban, mentioned he was significantly involved on the method Bain’s South African division “colluded” with the regime of former president Jacob Zuma to undermine the nation’s income service.

The consultancy has been awarded UK public sector contracts value as much as £63mn since 2018, together with £40mn-worth of Brexit consulting work for the Cupboard Workplace, however the harm to the corporate will probably be primarily reputational.

In a letter in February to Hain, the then Cupboard Workplace minister Steve Barclay wrote that the agency was “not a strategic provider to the federal government and isn’t at present enterprise any substantial work for the federal government”. 

Hain mentioned: “I’m more than happy. This units down a marker for all corporations which behave in an illegal, unethical and unprofessional method that they gained’t have the ability to tender for presidency contracts.

“I commend Jacob Rees-Mogg for doing this and I need the US authorities to do the identical factor.”

Bain mentioned: “We have been disillusioned and shocked by the minister’s choice . . . We will probably be responding to specific our concern in regards to the course of and its final result and to handle inaccuracies in his letter.

“If crucial, we’ll then take into account different choices for evaluate of the choice. Within the meantime, we’ll proceed to work with the Cupboard Workplace to make sure that we do what’s required to revive our standing with the UK authorities.”

Earlier this 12 months an inquiry into South Africa’s largest post-apartheid corruption scandal discovered that Bain had helped to undermine the nation’s income service by way of advisory work that aided Zuma’s allies.

Bain’s work on a restructuring of the South African income service was “a transparent instance of how the personal sector colluded” with the breakdown of public establishments, mentioned the inquiry.

It added that Bain sought to make use of a relationship with Zuma to amass additional authorities enterprise.

Bain has beforehand admitted failings in its work in South Africa and repaid charges, however mentioned that the inquiry’s findings mischaracterised its actions. Zuma has denied any involvement in corruption.

Different worldwide consulting companies have been embroiled in corruption scandals in South Africa.

McKinsey agreed in 2020 to repay about R650m ($39mn) over irregularities in contracts it had entered into with a neighborhood accomplice at government-owned corporations.

Auditor KPMG apologised in 2017 for “errors” in work for companies linked to the Gupta household, accused of significant corruption by way of ties to Zuma.

UK public relations agency Bell Pottinger was introduced down by its work for the Guptas, which led to accusations that it had stoked racial tensions in South Africa.

Banning an organization from bidding for public sector contracts is uncommon. Safety group G4S was briefly barred in 2013 after overcharging the federal government for the digital tagging of criminals, a few of whom have been useless or nonetheless in jail.

Consultancy Deloitte stopped pitching for public work for six months in 2016 after a be aware was leaked wherein its consultants criticised the federal government’s Brexit technique.