Consultancy Bain & Company said on Monday that its managing partner in its Johannesburg office would step back from day-to-day operations after admitting that its work for South Africa’s tax agency fell short of its standards.
But what exactly does that mean? Here are five things you need to know about Monday’s developments.
1. ‘A massive failure’
Bain is huge. The US-based company is one of the world’ “big three” management consultancies. So the fact that Vittorio Massone, Bain’s managing partner in Johannesburg, appeared before the inquiry into the South African Revenue Service (Sars) last month and called his firm’s work on a restructuring plan a “massive failure”.
2. Another massive firm
Bain is one of several major foreign firms to have become embroiled in governance scandals involving Zuma, who was ousted by the ANC in February. Another major global management consultancy company, McKinsey issued an apology to South Africa for its involvement in the capture of the country’s state-owned enterprises, and said it
would repay R902 million in fees to Eskom it had earned through a turnaround programme contract at the parastatal in 2016. And remember French arms company Thint (Thales)? Zuma is still facing corruption charges relating to a controversian multibillion-rand arms deal signed in 1999, when he was deputy president.
3. Another massive return on earnings
Like McKinsey, Bain also offered to pay back the money. It announced today that it would set aside the R164 million, plus interest, that it had earned from its work for Sars.
4. The Bain of Moyane’ tenure
Sars had built up a reputation as a world-class tax agency, but it was dogged by revenue shortfalls and corruption scandals under the tenure of suspended boss Tom Moyane, who hired Bain for the restructuring plan in 2015.
Moyane, a close ally of Zuma, is facing disciplinary charges relating to alleged misconduct at Sars. He denies wrongdoing.
5. Still partners
Bain said that its partner Tiaan Moolman would oversee its day-to-day work in South Africa so that Massone could focus on cooperating with the Sars inquiry. Massone will remain a Bain partner.
– Reporting by Reuters