Bain & Company is one of several powerful multinational corporations at the centre of corruption and State Capture in South Africa. Bain enabled the wrecking of the South African Revenue Service, contributing to economic hardship for all South Africans. Placing profit over principle, Bain remains unaccountable and continues to dodge responsibility for serious economic crimes.
The erosion of the South African Revenue Service (SARS) means that the country lost any buffer to tackle the fallout from the Covid-19 pandemic. In short, Bain & Company (Bain) helped destroy SARS, which led to consistent failures to collect revenue over a number of years. Bain, working with a network of corrupt politicians and bureaucrats, has enabled the pillaging of the country’s future.
To get a better sense of this global consulting firm, we need to understand its origins. Bain is a global management consulting firm headquartered in Boston in the United States. Founded in 1973, Bain is part of the so-called “Big Three” consultancy firms, which include McKinsey (itself deeply implicated in enabling State Capture as previously outlined by Open Secrets) and Boston Consulting Group (BCG). Each of the “Big Three” firms ensures details of their operations remain secret. Consultants wield a great deal of power and this is often coupled with excessive and obscure fee structures. Consequently, even when destruction is left in a project’s wake, they see handsome profits. Critics say that this is part of a pattern of conduct where consulting firms, “take no credit and accept no blame”.
Bain has an army of 12,000 consultants operating in 37 countries across 59 offices and has grown considerably since it was founded. Despite being the newest and smallest of the “Big Three”, it still enjoyed an estimated revenue of $4.3-billion in 2020 (more than R60-billion). Like its competitors, Bain has a diverse client list that includes the world’s top corporations, state-owned enterprises and governments.
Bain opened its South African office in Johannesburg in 1997. Today, Bain & Co. Africa runs offices in Johannesburg and Lagos, Nigeria and proudly claims to have “collectively completed more than 350 projects throughout sub-Saharan Africa”. One of these was at the heart of State Capture and contributed to gutting SARS.
‘Relationship consulting’ – main man Massone doing things the Bain way
Since the 1980s, Bain has been dubbed the “KGB of consulting” due to its notoriously secretive modus operandi. Bain’s business is built on “relationship consulting” which demands close ties developed with clients, typically among the powerful in business and politics. This approach is evidenced by the firm’s conduct at SARS, which left South Africa’s tax agency a hollowed-out shell. Bain reportedly raked in about R164-million from the havoc it wreaked at SARS.
Prior to its destructive reign at SARS, Bain had been trying to secure lucrative public sector contracts for some time. A door was finally opened by Ambrobrite Pty (Ltd) and its two directors, prominent entertainment industry businessman Dumakude (Duma) Ndlovu and Mpumelelo Ngema, a close friend of Jacob Zuma’s.
Ambrobrite was registered as an events, communications and project management company. Its connection with Bain began as an informal relationship between Vittorio Massone, then managing partner of Bain South Africa, Ndlovu and Ngema. The relationship was formalised in November 2013 when Bain entered into a Business Development and Stakeholder Management contract with Ambrobrite (Pty) Ltd, which ran from 1 November 2013 to December 2016. According to the contract, Bain would pay Ambrobrite a monthly retainer fee of R100,000, and R200,000 in instances where Ambrobrite “exceeds expectations”.
The contract explicitly states the purpose of the relationship as that which will, “drive commercial success for Bain & Company SA in the Government and State-Owned Enterprises sector”.
In other words, Bain paid Ambrobrite’s two showman owners Ndlovu and Ngema a minimum of R100,000 every month for almost four years to be introduced to various figures in the public sector – at least R4.8-million over the period. When taken in context, and one considers the R255-million Bain earned in the public sector (Telkom tender and fees from SARS), the almost R5-million paid by Bain & Co to gain access to the public sector is clearly a well-calculated cost. This meagre “introduction fee” ensured high returns on investment for the consultancy firm.
The relationship was a hit. It facilitated Bain’s connection with prominent figures in the public sector, chief among which included key architects of contemporary State Capture, former president Jacob Zuma and SARS commissioner Tom Moyane.
Evidence shows that Massone first encountered Jacob Zuma on 11August 2012. Dumakude Ndlovu was also present at this meeting. It was here that Massone presented a brainchild of Bain – Project Phoenix. Bain was ready to enter the lucrative public sector consultancy game and it had set its sights on the part state-owned telecommunications company Telkom, as a start.
Within a year, Bain – with little public sector experience in South Africa – had secured a dubious R91.1-million contract with Telkom. According to multiple media reports, that first broke back in 2014, chief among which include reports by Bloomberg and Business Day. Telkom hired Bain without any formal proposals and there is no record of Bain bidding for the work. It seems that Bain applied its classic strategy of “relationship consulting” to bag the Telkom contract. It was a strategy it would later deploy to gain access to lucrative work at SARS.