Boston-based global management consultancy Bain & Co was hit with a three-year ban on bidding for British government contracts on Tuesday over “serious professional misconduct” in a major corruption scandal in South- africa
Jacob Rees-Mogg, a Cabinet Office minister, told Bain that the affair had “called into question” the integrity of the company and that he was not convinced it had taken its role in the scandal. seriously enough.”
Britain is the first western country to impose such sanctions on Bain for its role in the “state capture” scandal in South Africa and there is already pressure on the US to follow suit.
In a letter seen by the Financial Times, Rees-Mogg told James Hadley, Bain’s UK managing partner, that the three-year ban would apply retrospectively from January 4, 2022. “I trust that after three years Bain & Co will have restored its reputation,” he wrote.
Rees-Mogg’s intervention came after pressure from Lord Peter Hain, the veteran anti-apartheid campaigner, who had urged Boris Johnson’s government to punish Bain for his “less despicable” behaviour.
Cabinet Office officials initially advised that no action against the company was necessary, but Rees-Mogg sought further advice, including from an external quality control.
He told Hadley that the firm would be banned from Cabinet Office contracts under the 2015 legislation on the basis that “Bain & Co is guilty of serious professional misconduct which renders its integrity questionable”.
Rees-Mogg, who will advise all government departments to apply the same three-year ban, said he was particularly concerned about the way Bain’s South African division “coddled” with former president Jacob Zuma’s regime to undermine the country’s revenue service.
The consultancy has been awarded UK public sector contracts worth up to £63m since 2018, including £40m in Brexit consultancy work for the Cabinet Office, but the damage to the company will primarily be the reputation.
In a February letter to Hain, then-Cabinet Office minister Steve Barclay wrote that the company “was not a strategic supplier to the government and is not currently carrying out any substantial work for the government”.
Hain said: “I’m very pleased. This sets a marker for all companies behaving illegally, unethically and unprofessionally that they will not be able to bid on government contracts.
“I commend Jacob Rees-Mogg for doing this and I want the US government to do the same.”
Bain said: “We are disappointed and surprised by the minister’s decision. . . . We will be responding to express our concerns about the process and its outcome and to address the inaccuracies in his letter.
“If necessary, we will consider other options to review the decision. In the meantime, we will continue to work with the Cabinet Office to ensure we do what is necessary to restore our standing with the UK government.”
Earlier this year, an investigation into South Africa’s biggest post-apartheid corruption scandal found that Bain had helped undermine the country’s revenue service through advisory work that helped the allies of Zuma.
Bain’s work on a restructuring of the South African revenue service was “a clear example of how the private sector colluded” with the breakdown of public institutions, the inquiry said.
He added that Bain tried to use a relationship with Zuma to acquire more government business.
Bain has previously admitted shortcomings in its work in South Africa and refunded the fees, but said the investigation’s findings mischaracterized its activities. Zuma has denied any involvement in corruption.
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Other international consulting firms have been implicated in corruption scandals in South Africa.
McKinsey agreed in 2020 to pay about 650 million rupees ($39 million) for irregularities in contracts it had entered into with a local partner in government-owned companies.
Auditor KPMG apologized in 2017 for “mistakes” in work for companies linked to the Gupta family, accused of serious corruption over links to Zuma.
UK PR firm Bell Pottinger was shot down over its work for the Guptas, prompting accusations that it had stoked racial tensions in South Africa.
Banning a company from bidding for public sector contracts is rare. Security group G4S was temporarily banned in 2013 after overcharging the government for electronic tagging of criminals, some of whom were dead or still in prison.
Consulting firm Deloitte stopped pitching for public works for six months in 2016 after a memo was leaked in which its consultants criticized the government’s Brexit strategy.