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Bain sets aside fees earned from Sars

The Boston-based consultancy will set aside the R164 million plus interest it earned from the revenue service.
Bain & Co conducted an internal review that found the work done for Sars didn’t meet the company’s standards. Picture: Moneyweb

Bain & Co will set aside the R164 million plus interest it earned from the South African Revenue Service after an internal review found the work didn’t meet the company’s standards.

The Boston-based consultancy is among a number of international companies including KPMG, McKinsey and SAP to be swept up in allegations of misconduct and corruption for work done during former President Jacob Zuma’s scandal-ridden tenure. President Cyril Ramaphosa suspended Tom Moyane, the commissioner of Sars, shortly after ousting Zuma in February, and appointed a panel to investigate whether the tax agency was being properly managed.

The commission of inquiry, headed by retired judge Robert Nugent, has heard testimony that Bain’s work for Sars weakened what was once an efficient organisation. Sars paid the management-consultancy firm to restructure and overhaul its operating model in an attempt to boost revenue collection when Moyane was at its helm as commissioner. The agency has missed its tax target every year since the implementation of the new structure in 2015.

“We do not want to benefit from work that was used to further a different agenda than was intended,” the Boston-based company said on the website of its South African unit. Tiaan Moolman, a member of the Bain partnership in South Africa, will take over the day-to-day operations of the local unit from Vittorio Massone to allow Massone to focus his time on cooperating with the commission. Massone remains a partner.

Bain has appointed Baker McKenzie to lead an independent investigation to understand what happened, it said. “To reinforce the independence of the investigation and Bain’s commitment to addressing any new facts, we have established an oversight committee made up of senior global Bain partners and outside directors,” the firm said.

McKinsey earlier this year agreed to repay South African power utility Eskom about R1 billion it earned in consultancy fees after the state-owned electricity producer failed to follow procurement laws. Auditor KPMG also offered to repay the money it earned from the tax authority and has been losing customers and staff since disclosing it did work for the Gupta family, who have been accused of using their friendship with Zuma to win state contracts and influence government appointments.

Former Finance Minister Pravin Gordhan has estimated that more than R100 billion may have been plundered during Zuma’s almost nine-year tenure in a process known as “state capture.” Zuma, who was forced to step down by the ruling party, and the Guptas, who have left the country, have denied wrongdoing.

© 2018 Bloomberg L.P

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Bain & Co should be careful. SARS will leave no good deed unpunished and will charge them donations tax, seeing than SARS cannot charge themselves for the windfall 🙂

Anybody who has ever worked at any one of these consulting firms will know about the never-ending pressure to generate fees, literally day and night. It is driven primarily by those fat cat partners at the top who wants to cash in all they can before retirement. If you look at what those guys earn in comparison to CEO’s you’ll be gobsmacked. So later they cut corners and accidents inevitably happen.

End of comments.

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