CAPE TOWN — Company apologies don’t come a lot stronger than Bain’s for its accounting complicity within the Zuptoid SARS capture. Whereas they’ve fired their level man who met some dozen occasions with Zuma and gave Tom Moyane a crash course in income assortment and administration to organize him for his strategic SARS deployment, Bains denies all culpability for having knowingly broken SARS. On the face of it their press assertion is an genuine try to return clear, apologise profusely and make good to the South African taxpayer. But as you learn it, there’s a sprinkling of proof that factors to rising income having blinded correct diligence – and a few astounding lack of oversight. One has to ask how they corporately did not discern Moyane’s nefarious agenda. The pink flags have been all over the place, however then their level man appears to have operated on a strict ‘need to know’ foundation – and like his precept shopper Msholozi – selected precisely who knew what. Maybe most worrying is Decide Nugent’s discovering that Bain did not co-operate with the fee’s work. Apparently, that’s precisely what Bain now most regrets. One has to ask what they might have executed had the Nugent Fee by no means been appointed. A completely fascinating learn. – Chris Bateman
Bain & Firm company assertion
The previous few months have been a extremely difficult and sobering interval for Bain South Africa and Bain globally. By means of public testimony and paperwork submitted on the Fee of Inquiry headed by Decide Nugent, it has grow to be painfully evident that the agency’s involvement with the South African Income Service (SARS) was a critical failure, for South Africa and SARS, and clearly for Bain too.
The Fee’s hearings, and the ultimate report revealed final week, have laid naked the disarray through which SARS now finds itself, with each morale and efficiency severely broken. Contributing to that end result was not the intent of the Bain challenge and we clearly made vital errors of judgement in taking over this work.
As a agency, we have been shocked and saddened by our involvement with SARS. We let down our shoppers, our individuals, our alumni and our agency. Most of all, we have let down South Africa.
We settle for that by way of numerous lapses in management and governance, Bain South Africa turned an unwitting participant in a course of that inflicted critical injury on SARS. We perceive the justifiable anger felt by South Africans and are deeply sorry for what has occurred to SARS and for our involvement.
Bain doesn’t, nevertheless, settle for that its representatives knowingly participated in an effort to wreck SARS. Bain made many errors in relation to SARS, however the agency had no motive, financial or in any other case, to wreck SARS, and didn’t set out to take action.
Background to the SARS task
Mr. Massone, Bain South Africa’s former managing associate, was launched in August 2012 to South African President Jacob Zuma and met with him a complete of 12 occasions over the next two years. We have been conscious that Mr Massone was assembly with the President with a view to construct Bain South Africa’s Public Sector apply, however have been stunned to find the frequency of their conferences.
It will seem that the majority of those conferences concerned different senior and well-respected South African enterprise leaders and have been aimed toward supporting the federal government to formulate and execute coverage over a broad vary of areas, reminiscent of ICT coverage, power, infrastructure deployment, entrepreneurship, and supporting supply of the federal government’s Nationwide Improvement Plan.
In October 2013 Mr. Massone was additionally launched to Mr. Tom Moyane, later to develop into the Commissioner of SARS, by Mr. Duma Ndlovu, an exterior advisor to Bain at the moment. It will seem that Mr. Massone understood that Mr. Moyane was the President’s meant appointee to be SARS Commissioner properly earlier than it occurred.
Over the course of the next yr, main as much as Mr. Moyane’s appointment as Commissioner of SARS, Mr. Massone had quite a few conferences that targeted on teaching him for this position, together with preparation of a “First 100 Days” doc.
Following Mr. Moyane’s appointment in October 2014, SARS ran a proper procurement course of in December. Bain gained this course of and was appointed in January 2015 to carry out a speedy diagnostic and make high-level suggestions on organisation restructure.
It’s clear from our investigations that Bain’s participation on this procurement course of might have been irregular because the agency had prior information of the RFP.
When Bain commenced work with SARS, we acknowledged that it was a well-performing establishment, however we felt there have been some areas by which it might be improved.
In our execution of the task, nevertheless, we made three vital errors.
First, we overstated the case for change by speaking concerning the requirement for a “Profound Strategy Refresh” of SARS. Though there was scope for enchancment, this didn’t justify the proposal of such a elementary overhaul of the enterprise.
Second, when Mr. Moyane disregarded our proposed organisational construction modifications and developed his personal reply, we should both have walked away, or a minimum of ensured that our scope for the subsequent part of labor was broad sufficient to make sure a workable working mannequin was put in place. As an alternative we consented to a scope of labor which we knew impaired our capacity to ship applicable outcomes.
Third, it’s also clear that whereas we began the work in good religion (nonetheless believing misguidedly that everyone’s intention was to enhance SARS), by late 2016 we both knew, or should have recognized, that Mr. Moyane had a unique agenda. It was a mistake to not stroll away additionally at this level, as an alternative seeing out our contract via March 2017.
Acknowledging the faults
Along with these particular errors, there are additional classes that Bain has discovered from the SARS engagement.
Bain SA’s former managing companion Vittorio Massone answering questions on the Nugent Fee of Inquiry.
Clearly some duty should lie with Mr Massone who displayed poor judgement in drawing us into the SARS task within the first occasion, after which didn’t adhere to some core Bain management values, particularly round transparency, as the issues at SARS unfolded. It is because of this that Bain and Mr Massone separated completely in November.
However as a agency we additionally recognise that we should settle for culpability for permitting an surroundings by which this might happen. These faults embrace:
Failures of governance
When a person in control of an workplace (Workplace Head) can also be the lead advisor to a shopper (Shopper Head), because it was within the case of Mr. Massone, the mixture requires extra lively international oversight than in different conditions the place both the Workplace Head or Shopper Head can carry out levels of oversight/problem. Within the case of South Africa, Bain additionally allowed dissenting voices to be ignored or side-lined. The business success and continued speedy progress of the South Africa workplace inspired Bain international to belief Mr. Massone and to not query his selections and actions intently sufficient.
Absence of public sector protocols
Solely a small proportion (~5%, since 2010) of our work in South Africa is for the general public sector. Consequently, there was a scarcity of robust public sector functionality or understanding of public sector protocols. In hindsight, there’s proof to recommend that Mr. Moyane was pursuing a private political agenda at SARS. Correct due diligence on Mr. Moyane might have recognized this danger.
Naïve on South African politics
We entered into this work for SARS with no full appreciation of the political surroundings and the agendas that people have been pursuing. Whereas our native information of South Africa was deep, the SARS expertise has been a cautionary reminder that we’re in danger if we don’t adequately perceive the home political setting when partaking in public sector work.
Looking for the reality
Because the fuller image got here to mild via testimony to the Nugent Fee of Inquiry, Bain’s mission has been to hunt the reality of what occurred, to make amends for behaviours which fell in need of what was anticipated, and to make the required modifications in order that they will by no means occur once more.
After Mr. Massone’s preliminary testimony, it turned clear that he was not being absolutely clear with the Fee or with Bain, and so we employed international regulation agency Baker McKenzie to conduct a radical, unbiased, forensic investigation. The work of Baker McKenzie recognized virtually 1,000 probably related paperwork which have been instantly submitted, unfiltered, to the Fee.
We additionally mandated Athol Williams, a revered educational, social advocate and Bain Alumnus, to offer his personal opinion on the independence and adequacy of the investigation by Baker McKenzie.
Bain regrets the Fee’s evaluation that we failed adequately to co-operate with its work. We dedicated to be clear with the Fee and consider we have made each affordable effort to stay as much as that dedication.
We owe it to South Africa, our shoppers, our alumni and our individuals to study the suitable classes from this episode and implement appropriate cures to stop repetition. We have already returned to SARS all the charges plus curiosity that we acquired for our engagement with them.
Our proposed fixes acknowledge that our errors at SARS transcend particular person actions and should additionally tackle broader failings. These embrace:
Public Sector Working Group
The Bain Board has launched a Public Sector Working Group, tasked with enhancing how we govern and strategy public sector work globally, together with South Africa, and creating a set of protocols to information any future work on this sector. The working group will even advocate how oversight should be offered previous to and through any future public sector tasks.
Public Sector Danger Perform
We additionally envisage establishing a public sector danger perform unbiased of line management and accountable to our Board, which might undertake danger assessments throughout nations, workplaces, shoppers and alternatives, set up a whistle blowing perform, and take part in common danger evaluations. In parallel we plan to strengthen our capability in working inside the public sector, together with stricter protocols in how we interact and contract with our shoppers. We envisage this evaluation will slender the vary of each the tasks we undertake and the shoppers with whom we work.
Altering Bain South Africa
To make sure a re-set of the management and the tradition of our enterprise in South Africa, we have appointed a everlasting workplace head from outdoors the Bain South Africa management group. Mr. John Senior, a extremely skilled Bain associate and a worldwide chief in our Digital, Telecoms, Media & Know-how follow, will assume the position of head of Bain South Africa from January 2019. John has spent the previous eight years as a senior companion in Bain’s New York and Sydney workplaces.
We have additionally determined to create a South Africa Advisory Board, which can comprise skilled native and international companions, authorized counsel in addition to exterior advisors, to information our future work and be sure that native governance practices are adhered to in South Africa.
SARS has been a humbling episode for Bain. We have let South Africa and ourselves down, and it’s our earnest want to make good our improper. It will take time, however we’re decided to point out once more the higher face of the agency. This consists of participation in any additional authorities or judicial investigations into SARS as applicable. We may also do every little thing in our energy to make sure that Bain itself learns the appropriate classes.
Whereas extremely regrettable, the SARS task is by no means consultant of the agency’s actions in South Africa the place it has a monitor document of being a valued associate throughout a number of totally different shoppers and assignments.
We hope that by acknowledging our failings within the SARS course of, and finally making amends for them, we’ll in time once more be thought-about a trusted and high-quality companion for change oriented companies in South Africa.