Telkom: nothing wrong with 2013 Bain & Co contract
Telkom said it broke no rules when it awarded a contract to scandal-plagued consulting firm Bain & Co in 2013.
Bloomberg reported in 2014 that Bain secured the R91m advisory contract without the fixed-line operator following an open bidding process.
The Boston-based management consulting firm received the contract soon after Sipho Maseko took over as Telkom CEO. The scope included advice on Telkom’s broadband and mobile strategies.
Telkom said this week it was “satisfied that the appointment of Bain in 2013 … was appropriately handled at the time in terms of the company’s delegation of authority and any other procedures”.
“As is standard practice, companies consider management consultancy services for various reasons including objectivity and as change catalysts. Given the rate of change in the telecommunications sector, Telkom would consider the use of management consultancy services in the future,” it said.
Being a listed company that is about 40% held by the state, Telkom was in a relatively unique position when it came to tendering, given that it contended with conflicting rules under JSE regulations and the Public Finance Management Act (PFMA), a source said.
Telkom held discussions with government ministries aimed at resolving this issue, and the finance minister at the time, Pravin Gordhan, granted it exemptions from certain provisions of the PFMA so that it could comply with JSE rules, the source added.
In its 2014 report, Bloomberg said Maseko regularly visited Bain’s Johannesburg offices in the 10-month period between leaving his previous employer, Vodacom, and joining Telkom.
Although he met with McKinsey, Boston Consulting, Accenture and Delta Partners, Maseko did not seek formal proposals from the other consultancies, sources said at the time.
Bain is one of several multinationals embroiled in SA’s state capture narrative. The firm was contracted, allegedly through an irregular tender, to overhaul the structure of the South African Revenue Service under suspended commissioner Tom Moyane when he took over in 2014. –