South African-raised British peer Lord Peter Hain is applying pressure on the Westminster Government to stop doing business with global consultancy firm Bain & Co over its misbehaviour in South Africa. The commission of inquiry into the near collapse of SA Revenue Services concluded that there was a “premeditated offensive against SARS by Bain for former commissioner Tom Moyane to seize SARS.” The Nugent Commission‘s final report says Bain executives “trained” Moyane, meeting with him on numerous occasions in the year before his appointment. Bain officials also met at least ten times with then president Jacob Zuma. The Nugent Commission concluded that this was to advance a plan to de-fang SARS, and stop its investigations into Zuma associates. Peter Hain tabled questions about Bain in the House of Lords – we caught up with him for Rational Radio. – Alec Hogg
Peter you’ve picked up the cudgels against Bain. Is it because of what they did at SARS?
Yes it is. I felt that was outrageous and they’ve been rightly criticised including by the deputy director general of Treasury who wrote a recent article detailing this. The South African Revenue Service (SARS) has been completely turned – from one of the most feared tax agencies, one of the most efficient in the world under Pravin Gordhan and other’s, into one that’s actually became dysfunctional in order to allow the Guptas, the Zuma’s and the rest of them to continue to evade taxes and to impoverish the South African Treasury on top of what else they have done to our state owned enterprises. Why I feel strongly about this Alec, and why I put these questions down, is to find out what British government departments were doing here. I don’t believe that these global corporates – and there have been a long trail of them, should actually get British government contracts. I think they should be punished for their misbehaviour in South Africa.
So it’s extraordinary if you think about what has come out of the Nugent Commission. It was premeditated as you’ve said – in fact that the Nugent Commission said it itself. There hasn’t been any kickback yet. Bain themselves unlike McKinsey, or certainly from an international sense, haven’t admitted any wrong doing. By bringing pressure to bear in the UK, is it one of your intentions to perhaps force them to own up?
Thats what I’d like frankly when I raised these matters – first of all in the House of Lords at the end of 2017 early 2018. What was interesting is that what had been raging in South African politics and in the media over Bell Pottinger, KPMG, McKinsey and HSBC and so on, for at least a year. Then came the email links and so on. It was only really when it was raised in London that it went global. The New York Times reported it, the Washington Post and also the Financial Times – the global financial newspapers, which are hugely respected. Suddenly these corporates were on the front pages of all these newspapers. The Economist did a big exposé as well as other globally read magazines. The other corporates – McKinsey and KPMG, and the rest of them started feeling the heat. It was as if the South African operations could get away with blue murder, but it really hit them when their global reputation started to suffer. In a small way, putting down these questions is only really nibbling at the problem to be perfectly frank. There isn’t scope to do the kind of speech that I did under parliamentary privilege in respect of the other corporates and in respect to the Zuma’s and the Gupta’s. There isn’t that opportunity at the moment with the whole of our parliament being Brexit gridlocked, but I hope that they will feel the heat as well. They’ve been conniving and being paid fat fees for it. To allow the South African Revenue Service to be turned over, to allow state owned enterprises like Eskom, Transnet and South African Airways and others to be looted. They’ve been issuing soft reports, whitewash reports – actually assisting this whole process and I believe they should pay a big penalty in terms of their bottom lines globally.
Peter, it’s an interesting point that you made earlier that only when the international community started paying attention did it seem as though the tide turned against the Zupta’s. Given that Bain came to the party very late or was outed very late, is there an opportunity for that to happen again or might the moment have past?
I don’t know whether it can. You’re a news person and sometimes a story really captures the moment, which it did towards the end of 2017. You know how fickle the news media can be and how they move on to something else. Frankly they shouldn’t. There is nothing more important in business and the financial sector and the efficient running of an economy – and therefore a society, than a proper functioning tax collecting service. South Africa had one of the best in the world under Pravin Gordon. It has been severely disabled and as you know there’s an attempt to repair it now, but it’s hard work. Whether Bain will feel the heat or not – they’re hoping to get away with it because they’re keeping their heads low, but I don’t think they should and I’ll do my best to make sure that they don’t.
So what questions specifically did you ask in the House of Lords?
I asked whether there were any contracts held with government departments and it turns out there are. I asked what the scale of the work is and whether they are on preferred bidder lists and it turns out that they are. What I want is for them to be suspended from those contracts and be suspended from a preferred bidder for government work lists – until they have owned up to what they did in South Africa. Until they’ve paid back any fees that they’ve got. Added to that – to make payments for any damage that they did. Until then, I don’t think they should continue to operate as if they are stain free, when they clearly are not.
So you now have confirmation that indeed they do have contracts with the British government. Do you have any idea how much could be involved here?
No I don’t know. I’m trying to find out and the government is being a bit coy about it. They tend to make it a bit difficult to uncover these things and I’m not a massively resourced research agency. I’m just me and therefore I can only do a certain amount. If they had any honour and credibility in this matter, I think Bain would be owning up to what happened and saying that they did wrong and making the necessary compensation in order to establish their reputation again. They shouldn’t get any contracts in South Africa either by the way, either private or public. And we’ve seen how KPMG and McKinsey have suffered badly in South Africa, as well as globally. They’re in the same box and until they own up, they’re not going to be able to climb out of that box I hope.
Lord Peter Hain who is talking to us from the House of Lords and just to put it back into some perspective, quoting from the Nugent Commission report, it was a premeditated offence against the South African Revenue Services by Bain for Moyane to seize control of SARS. 200 managers were displaced according to the Nugent commission report as Lord Hain told us a bit earlier, SARS – which in 2014 was regarded as one of the one of the best revenue services in the world, is now one of the worst.