Business Leadership SA terminates partnership with Bain over SARS issue

11 October 2018 Consultancy.co.za

As global management consultancy Bain & Company’s involvement in the South African Revenue Service (SARS) scandal crystalises, leadership forum Business Leadership South Africa (BLSA) has announced that it will terminate relations with the firm, citing its anti-corruption oath as part of the reason.

In 2014, consulting firm Bain & Company was commissioned to evaluate SARS’ operations and offer recommendations. The firm’s final report recommended a complete restructuring, which included the closing down of key regulatory divisions such as those monitoring the taxes of big corporations and those investigating illicit business activity.

The recommendations were implemented, and the repercussions have come to light in recent months, which has thrown Bain’s South African division into a flurry of legal action. The firm has also been losing a number of crucial partners in the country, the latest of which is BSLA.

Describing its motivations for the move, BLSA expressed surprise that Bain had let “its respected institution to be embroiled in yet another state capture project under the pretext of ‘restructuring’, consequently aiding the collapse of a well-oiled, perfectly functioning state-owned company.”

Chief Executive at BSLA Bonang Mohale said, “We are emphatic that Bain & Company must appoint an independent enquiry and continue to co-operate fully with the authorities. To the extent that the wrongdoing is found to have systemic or institutional causes, we expect that the relevant systems will be changed and institutional reforms will be undertaken. “

He added, “While we accept that wrongdoing can be caused by ‘a few rotten apples,’ this assertion cannot be accepted at face value and must be rigorously tested. If remedial action is found to be necessary, we require that it be fully proportional to the wrongdoing.”

So far, the extent of remedial action taken on Bain’s part has been the announcement that the firm would earmark the entire fees received from its work with SARS – amounting to a total of R164 million – to be deployed as prescribed by the enquiry body or towards a social cause in South Africa.

Bain is among a host of consulting firms that are currently in trouble in South Africa. McKinsey & Company as well as KPMG have been losing a steady stream of business recently as a result of their involvement in the Gupta scandal.