Bain & Co, the Boston-based international administration guide, was on Tuesday hit with a three-year ban from tendering for British authorities contracts due to its “grave professional misconduct” in a significant corruption scandal in South Africa.
Jacob Rees-Mogg, Cabinet Office minister, informed Bain that the affair had rendered the corporate’s integrity “questionable” and that he was not satisfied that it had taken its function within the scandal “sufficiently seriously”.
Britain is the primary western nation to impose such penalties on Bain for its function within the “state capture” scandal in South Africa and there may be already stress on the US to comply with swimsuit.
In a letter seen by the Financial Times, Rees-Mogg informed James Hadley, Bain’s UK managing companion, that the three-year ban would apply retrospectively from January 4 2022. “I trust that after three years have elapsed Bain & Co will have restored its reputation,” he wrote.
Rees-Mogg’s intervention got here after stress from Lord Peter Hain, the veteran anti-apartheid campaigner, who had urged Boris Johnson’s authorities to punish Bain for its “despicable” behaviour.
Initially, Cabinet Office officers suggested that no motion towards the corporate was essential however Rees-Mogg sought additional recommendation, together with from an exterior QC.
He informed Hadley that the corporate can be banned from Cabinet Office contracts underneath 2015 laws on the idea that “Bain & Co is guilty of grave professional misconduct which renders its integrity questionable”.
Rees-Mogg, who will advise all authorities departments to use the identical three-year ban, mentioned he was notably involved on the approach 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 price as much as £63mn since 2018, together with £40mn-worth of Brexit consulting work for the Cabinet Office, however the harm to the corporate will likely be primarily reputational.
In a letter in February to Hain, the then Cabinet Office minister Steve Barclay wrote that the agency was “not a strategic supplier to the government and is not currently undertaking any substantial work for the government”.
Hain mentioned: “I’m very pleased. This sets down a marker for all companies which behave in an unlawful, unethical and unprofessional way that they won’t be able to tender for government contracts.
“I commend Jacob Rees-Mogg for doing this and I want the US government to do the same thing.”
Bain mentioned: “We were disappointed and surprised by the minister’s decision . . . We will be responding to express our concern about the process and its outcome and to address inaccuracies in his letter.
“If necessary, we will then consider other options for review of the decision. In the meantime, we will continue to work with the Cabinet Office to ensure that we do what is required to restore our standing with the UK government.”
Earlier this yr an inquiry into South Africa’s largest post-apartheid corruption scandal discovered that Bain had helped to undermine the nation’s income service by means of advisory work that aided Zuma’s allies.
Bain’s work on a restructuring of the South African income service was “a clear example of how the private 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.
Other worldwide consulting corporations 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 companion at government-owned firms.
Auditor KPMG apologised in 2017 for “mistakes” in work for companies linked to the Gupta household, accused of great corruption by means 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. Security group G4S was briefly barred in 2013 after overcharging the federal government for the digital tagging of criminals, a few of whom had been useless or nonetheless in jail.
Consultancy Deloitte stopped pitching for public work for six months in 2016 after a observe was leaked by which its consultants criticised the federal government’s Brexit technique.
Source: www.ft.com