Top firm probes its work for SARS
Commission of inquiry hears Bain appointment littered with ‘red flags’
International consultancy Bain & Co has launched an internal investigation into its work for the SA Revenue Service (Sars) after shocking information emerged at the commission of inquiry into governance at the tax agency.
The company’s overhaul of the Sars operating model was blamed by senior officials testifying at the commission chaired by retired judge Robert Nugent for the destruction of the tax agency’s capacity – which contributed to the hole of about R50bn in revenue collection for 2017-18.
The information raises concern about the role played by private sector consultants in the audacious attempt to hollow out the state and neutralise key institutions during the Jacob Zuma administration. McKinsey and audit firm KPMG have also launched internal probes into allegations that some of their employees made state capture possible.
On Sunday, Bain confirmed that it has launched an investigation to establish the “facts” about the work it did for Sars. The probe will be conducted by Bain ’s global legal team, along with external legal counsel.
At the Nugent commission on Friday, it emerged that Bain managing partner in SA Vittorio Massone gave suspended Sars commissioner Tom Moyane a “presentation” on the agency in 2013. At the time, Moyane was employed by the department of correctional services. He was appointed Sars commissioner in September 2014.
Three reliable sources – who spoke to Business Day on condition of anonymity – said Massone visited Zuma at his private residence in Nkandla late in 2013 and again early in 2014.
It emerged at the commission on Friday during testimony by Solly Tshitangano, a procurement official at the Treasury, that the process to appoint Bain to restructure the Sars operating model was “irregular”, littered with “red flags”. It raised suspicions that the decision on which consultancy would win the tender was predetermined.
Massone testified at the commission on Friday that he had met with Moyane to talk about Sars a year before he was appointed commissioner of the tax agency.
The Bain boss admitted that he met with “people of influence” periodically and that it had been Moyane’s ambition to become Sars commissioner.
Bain said in response to questions about the Nkandla meeting that questions raised during testimony at the inquiry on Friday, and further questions from the media, had caused it to “extend and deepen” its internal investigation.
“We want to be absolutely certain that we entered into our Sars engagement in full compliance with applicable procurement laws and that our investigation’s findings are accurate and unassailable,” the company said in a statement.
Bain said it listened with concern to the testimonies of Sars employees who feel they have been “mistreated and disrespected, at their frustration and pain and the consequences this has had on the lives of these individuals and their families.
“We are dismayed by the way our work has been used to further a different agenda than was intended.
“In our recommendations, there was no need for any layoffs or terminations. This didn’t turn out to be the reality when the model was implemented.
“Through the various commission testimony, we now know that essential elements of delivering a successful operating model were not systematically addressed, causing the failure at Sars.”
Tshitangano testified that the 50% discount Bain gave the tax agency for its work was unusual.
It also marked a deviation from what Sars told the finance minister when it requested approval to put out a tender for the work.
In a letter to the minister the agency said it would hold a closed tender and invite companies already on its database to bid for the work.
It was also unusual that, when companies were invited to a briefing in December 2014 on the tender and were asked to submit their proposals the following day, Bain had already included its price in its documents.
“My suspicion is that, for you to be able to provide documents with a price a day after attending the briefing, you would have started some time back and this is a problem we know in government,” Tshitangano said.
After the first phase of work was concluded, Sars “changed its story”, instead of going to the market for bids for phase two of the project, Sars deviated from procurement processes and retained Bain.