Business Leadership takes flak for not booting out Bain
US-based consultancy firm signed membership pledge to fight corruption. By
The release of the first part of the Zondo Commission report into State Capture has put unexpected scrutiny on the integrity of Business Leadership South Africa (BLSA), a body that is made up of prominent companies and business leaders.
As a lobby group, BLSA has called out lapses in ethical behaviour in the corridors of business, government, labour and broader society for many years. A prime example of this is BLSA criticising Jacob Zuma and his nine-year presidency, during which State Capture flourished and institutions of accountability were destroyed.
But the heat has now been turned on BLSA and its credibility has come into question.
BLSA has been forced to respond to questions about why it embraced and kept Bain & Company as a member of its organisation despite mounting evidence that the USbased consultancy firm was a key enabler of State Capture.
To recap: Two commissions of inquiries (the Zondo and Nugent commissions) have placed Bain at the centre of capturing, restructuring and destroying the SA Revenue Service (SARS) by colluding with the tax collection agency’s former commissioner Tom Moyane and Zuma.
In 2014, Moyane awarded Bain a tender worth more than R160-million to restructure SARS operations, including overhauling its IT infrastructure and changing its organisational/governance structure. Bain’s restructuring destroyed SARS’s anti-tax evasion units, led to about 200 senior managers being displaced, skilled people being hounded out, and the organisation’s ability to collect tax revenue being weakened.
Even after the Zondo Commission’s first report was released in early January 2022, BLSA did not act against Bain. No sanctions were imposed and Bain wasn’t kicked out of the BLSA fold. Eventually, Bain itself announced, on Tuesday, 18 January, that it was voluntarily withdrawing its membership from BLSA after facing renewed backlash for its role in destroying SARS and involvement in State Capture.
“This is a shame. Bain should have been sacked by BLSA,” said Iraj Abedian, a senior economist at Pan-African Investment and Research Services. Abedian added that if BLSA had immediately terminated Bain’s membership it would have sent a strong message that the business lobby group was serious about taking decisive action against private sector players implicated in high-level corruption.
BLSA’s anti-corruption pledge
Keeping Bain in BLSA’s fold also flew in the face of the organisation’s integrity pledge, which about 70 companies (BLSA members) are signatories to.
As a BLSA member, Bain committed itself to the pledge, which seeks to commit member companies to fight against corruption, money laundering and other pernicious behaviour. The companies pledge to “actively combat corrupt practices wherever we encounter them”, “not act anti-competitively”, “have zero tolerance for corruption in our midst” and “protect whistleblowers and provide information.”
After Bain’s involvement in the erosion of SARS was brought to light by the Nugent Commission in 2018, BLSA immediately suspended the company as a member. But, three years later, BLSA reinstated it.
BLSA CEO Busi Mavuso has taken umbrage at suggestions that the organisation defended Bain or that it was too lenient on the company, calling such suggestions “nonsense”. Mavuso has maintained that BLSA has been consistent in its tough approach towards Bain, as seen in the immediate suspension of the company’s membership from the organisation in 2018.
Mavuso said BLSA required Bain to show demonstrable steps in reforming its governance processes before its membership was reinstated in 2021.
Mavuso said that, since Bain’s 2018 suspension, the company had taken steps to reform its governance processes, including, among other things, launching an independent investigation (led by law firm Baker McKenzie) into its work at SARS, paying back the fees it unlawfully earned at the tax collection agency and firing its former managing partner in SA, Vittorio Massone. Massone was found by the Nugent Commission to have engineered the erosion of SARS, along with Moyane and Zuma.
BLSA was also planning to engage with the current Bain leadership in light of the latest Zondo Commission findings against the company — before it withdrew its membership.
The BLSA-Bain saga has put the spotlight on other business lobby groups that have members implicated in State Capture by the Zondo Commission report. BLSA’s affiliate organisation, Business Unity South Africa (Busa), is also facing pressure from the public to sanction its member companies, including PwC and Nedbank, that have been mentioned in the Zondo Commission report for all the wrong reasons.
Busa president Bonang Mohale recently told the organisation’s board would engage with member businesses mentioned in the report to get a full briefing about allegations faced, and to understand what actions those businesses intended to take to correct their past behaviour.
If BLSA had terminated Bain’s membership it would have sent a strong message that the group was serious about taking decisive action on high-level
corruption