Bain & Co replaces SA head, offers refund
Consulting firm to pay back R164m for ‘different agenda’ neutralising Sars
Consultancy Bain & Co has replaced its SA head and offered to pay back money earned for work done at the SA Revenue Service (Sars), which it admits was used for a “different agenda” than originally intended.
Bain, one of the top three global consulting firms, said in a statement at the weekend that managing partner Vittorio Massone has stepped down and that it does not want to benefit financially from the work, for which it was paid R164m.
The firm has become the latest multinational to be embroiled in state capture. It was contracted, allegedly via an irregular tender process, to overhaul the structure of Sars under suspended commissioner Tom Moyane when he took over in 2014.
The commission of inquiry into governance and administration at Sars, chaired by retired judge Robert Nugent, has heard how the increase in VAT for the first time in two decades – which has hit the economy and the poor hard – was made necessary partly by the revenue shortfall of R50bn at Sars in 2017-18.
The inquiry has heard evidence from dozens of former and current Sars officials indicating that the Bain restructuring caused the depleted capacity at the tax agency, which led to the revenue shortfall.
The Bain restructuring neutralised key units in the organisation, such as enforcement, the large-business centre, litigation and compliance.
The consultancy conducted only 33 interviews over six days to conclude the work on restructuring the complex tax agency, which took two decades to build from scratch. Those interviewed were handpicked by Moyane.
Massone apparently met former president Jacob Zuma twice at his private residence at Nkandla in 2013 and 2014 and has admitted to the inquiry that Moyane asked him for a presentation on the tax agency, which he delivered a year before the now suspended commissioner was appointed by Sars.
This raises questions about whether Massone was complicit in the alleged project to neutralise Sars, which current and former officials have raised before the Nugent inquiry.
In the statement, Bain said it was “deeply troubled” by the pain suffered by Sars employees and revealed its internal investigation is being conducted by international law firm Baker McKenzie.
The R164m, plus VAT, it earned would be set aside and used as prescribed by the Nugent inquiry or in the absence of direction would be used for “the benefit of SA”.
Bain has appointed Tiaan Moolman, a Bain partner, to run its SA operations and has established a committee to oversee its internal investigation into the Sars contract, chaired by its senior global partner, Athol Williams.
Bain launched its internal inquiry last Sunday after the Nugent inquiry heard damning evidence of how its work had damaged Sars’s capacity to collect revenue and after media inquiries about Massone’s link to Zuma and Moyane.