Thanks to the Nugent Commission of Inquiry, consulting firm Bain & Company’s role in the capture and destruction of the South African Revenue Service (Sars) is being painfully and shockingly burnt into our memory. Bain, for the sake of raking in fees, essentially took on a task that was too hot for it to handle.
It seems not to have been too concerned that careers would be destroyed; that high-performing individuals would be served with suspension letters and put under unbearable duress until they resigned. It seems not to have been too concerned that its ‘solution’ for Sars – a “profound strategy refresh” – would ultimately result in losses to the fiscus of over R50 billion (and mounting). Nor did it seem too concerned that it might take Sars many years to recover.
Vittorio Massone, a partner in the firm’s Johannesburg office who met with since-suspended Sars boss Tom Moyane in October 2013, prior to Bain being tasked with the restructuring of Sars, provided the commission with a written response about the meeting. But Massone did not appear before the Commission to answer questions. He had taken ill and is in Italy.
Stuart Min, vice president and general counsel at Bain, flew in from the United States. But he is not Massone, and he could not answer for Massone. Nor did he make a good impression. He is of the opinion that the subpoena he received over the weekend couldn’t be enforced as he is a US citizen. That didn’t go down well.
His style in responding to questions is very similar to Massone’s, and Judge Robert Nugent had to frequently coerce him to “Just answer the question”. A prize example: “Did you really think that the commission was not interested in the other reports?” Answer: “We were responsive to the specific question.”
The commission had not previously been informed of all the meetings Bain had with Moyane prior to the awarding of the Sars contract. Moyane apparently became interested in Sars when former commissioner Oupa Magashula resigned in 2013, and “contacted” Bain for advice related to how he could achieve his professional goals. However, it is apparent that Bain met Moyane at ousted South African president Jacob Zuma’s house. This is like the chicken and egg conundrum. Who met whom first, and why?
Min asserted that it is part of Bain’s objectives to meet with high performing executives and help them achieve their goals. Bain prepared an “Outside-in” perspective on Sars for Moyane. This begs the question, what was the total cost of these consultations, and who paid? Unless it was a slam dunk that Moyane would get the commissioner’s post and the cost of the consultations was included in the R164 million Sars paid Bain?
Bain recommended the “profound strategy refresh” to Moyane – and this was before anyone from the consulting firm had ever visited Sars, or interviewed any Sars staff. (Not that they get full marks for their interview techniques when they eventually did get round to it.)
But why a profound refresh? It’s clear that the brief was to totally transform Sars – before they had any idea why.
Part of Bain’s plan was to attract and retain a top management team. This implies that there wasn’t a top management team, and may explain why Moyane suspended the Sars executive team within the first few weeks of his arrival. The team had not supported the destruction of the special investigation team, the breaking up of the Large Business Centre, the cessation of the modernisation project, or the termination of key positions.
According to Bain’s ‘Outside-in’ perspective, the role of chief operating officer (COO) was too “concentrated”, which led to “duplication and inconsistencies”. Barry Hore was COO at the time, and was also in charge of the IT modernisation project. It is evident that his position was flagged to be handed to someone else. Bain hadn’t yet visited Sars.
Bain prepared a document for Moyane to guide him through his first 100 days at Sars, including the framework and actions:
- Launch an IT diagnostic plan
- Testing BH [presumably Barry Hore] and testing components of the COO perimeter
- Build a healthy sponsorship spine to accelerate change, and identify individuals to neutralise.
There is no explanation of what a “healthy sponsorship spine” is or entails. I am of the view that it may ironically refer to those within Sars who either proffered themselves or were turned into promoters of Bain’s agenda. Collaborators.
Bain proffered an entirely different explanation of the meaning of “neutralise”. Bain has a product that measures employee or consumer satisfaction. Employees are classified as being “promoters, hackers or detractors, depending on their level of satisfaction with their employer”. Bain would turn detractors into promoters. Clear as mud?
The commission received 23 lever arch files of documentation from Bain on Friday. These comprised approximately 600 documents which in Bain’s opinion complied with “the scope of the request”. Bain claims to have conducted a systematic search for information, and reviewed thousands of documents. It is not clear why the firm felt it needed to review the documents. They could simply have been handed to the commission.
In addition, there is no one from Bain who can answer any questions on the documents.
With the resignation of Hore late in 2014, one can’t help but wonder if this wasn’t initially a plan concocted by Zuma and Hore’s acting-COO replacement, Jonas Makwakwa. Bain may in fact have been retained by those two to find the ideal candidate to take on the role of commissioner and carry out the transformation plan. They found the ideal candidate in Moyane.
Bain still has a lot of explaining to do. Massone and his colleagues should get some vitamin shots. They can’t cry off sick every time.