Bain’s Woes in RSA Raises Questions in Parliament

Last week in a Lords Chamber debate, Lord Peter Hain asked why Bain & Company were still able to bid for multi-million-pound UK contracts “when the company has recently been found by a South African judicial inquiry to be guilty of unlawful complicity in corruption under former President Zuma?”

Hain is referencing the judicial commission’s findings on the management consultancy Bain & Company’s role in alleged corruption in South Africa under the former president Jacob Zuma. A South African judicial commission investigating state capture and corruption concluded there had been “collusion” between Bain and Zuma to reshape entire sectors of the economy.

Lord Hains’ concerns include the failure to disbar Bain & Company from tendering for government contracts, in their near purchase of Liverpool Victoria Financial Services last December and he is seeking an amendment to the Procurement Bill, excluding any company with a record of such illegal behaviour from being awarded UK contracts.

A Guardian article from January outlines the nature of the scope of the allegations against Bain & Company, which includes allegations that “Bain knew in advance that a new South Africa Revenue Service (Sars) chief was due to be appointed and provided him with a “first 100 days” plan to overhaul the service, despite it being “highly rated by independent assessments of efficiency”, and even though internal documents showed “Bain knew it did not have the expertise to perform the work”. A section of the proposals published by the commission included advice to “identify individuals to neutralise” within Sars, which “Bain said, did not mean that opponents of its plans for the revenue service should face any kind of punishment, but that they should be persuaded to be “neutral” towards its proposals.” There were also allegations of large sums of money being offered to silence witnesses in the case.

Zuma refused to cooperate with the inquiry, leading to his imprisonment in July for contempt of court. Bain & Company admitted some ‘lapses of leadership and governance’.

During Chambers, Baroness Smith of Basildon added that the Bain issues expose deficiencies in the Procurement Bill as published. Schedule 6 of the Bill outlines the criteria under which a supplier must be added to the debarment list and cannot be awarded public sector contracts. She drew attention to Schedule 7, which provides wide scope for discretionary disbarment, even on the grounds of national security, and a lack of clarity as to why it is discretionary and what criteria will be deployed in making that judgment. She called for the publishing of additional guidance, which would inform Committee debates, on what considerations will be taken into account where such disbarment is to be discretionary.

In response to these questions from Lord Hain and Baroness Smith, Lord Nicholas True attested that “ I am aware of one live contract that Bain has with an NHS trust, which has a contract value of approximately £2 million.”

Integrating our own government contract database we can be confirmed that no other contracts have been awarded to Bain and Company by the UK Government, since January 2022.

Lord True responded to these issues by advising that the Cabinet Office review into this specific company will conclude within weeks as will discussions on the Procurement Bill. He stated his concerns at suggestions of corruption and misconduct and advised the scope of misconduct in the Bill will be widening.

This issue certainly raises the question of the impact on global or multinational entities bidding for contracts in one market, where they may have legal issues, alleged or proven, in other markets. Whose role is it to monitor, assess and adjudicate whether a business is fit to bid for government contracts? We’ll come back to this issue again.

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