Bain & Company Statement: SARS Commission of Inquiry
10 September 2018 - Bain & Company prides itself on helping our clients achieve sustainable results. Our work on the organization structure at SARS did not achieve this and we are deeply troubled by the pain suffered by employees of SARS and their families.
To understand what happened, we launched an independent investigation led by the global law firm Baker McKenzie. The investigation is focusing on understanding the facts relating to people, processes, and governance that resulted in us getting and accepting the work.
Our own internal review established that our engagement with SARS did not meet our standards for delivery of sustainable, positive results for our client. We do not want to benefit from work that was used to further a different agenda than was intended.
Bain & Company’s global Board yesterday approved to set aside all of the R164M of fees plus interest, from our work with SARS. This money will be used either as prescribed by the Nugent Commission of Inquiry or – in the absence of such prescription – for the benefit of South Africa. In the latter instance, we will seek guidance from civil society, government, and business leaders on how these funds can best be used.
We continue to cooperate voluntarily with the Nugent Commission of Inquiry. Tiaan Moolman, a long serving member of the Bain partnership, will take over day to day operations of Bain South Africa to allow Vittorio Massone to focus his time on cooperating with the Commission. He remains a partner of Bain & Company.
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. Athol Williams, a Bain alumnus and a respected independent advisor, will chair this committee on an interim basis. He is a distinguished academic in the area of corporate responsibility, a corporate leader and lifelong social advocate. Bain’s contract with Mr Williams calls for him to do what is right for South Africa, without restrictions.
Bain continues to be committed to our people, our clients and to South Africa. We are actively exploring additional ways to be part of the solution to creating prosperity in the country. We will be seeking guidance from multiple stakeholders in this process.
While external stakeholders and Bain leadership await the outcome of the independent investigation, we acknowledge that the desire for answers will continue to build. Please be patient with us as we take the necessary steps to answer questions raised.
2 September 2018 - In light of new questions being raised during last week's testimony before the SARS Commission of Inquiry and from media inquiries, Bain & Company is now undertaking a deep and extensive investigation, led by our global leadership and external counsel, into all matters relating to our work with SARS. We want to be absolutely certain that we entered into our SARS engagement in full compliance with applicable procurement laws and that our investigation's findings are accurate and unassailable.
We want to be completely open and transparent, as we believe that is what the people of South Africa deserve. However, given the Commission of Inquiry is continuing its investigation we cannot publicly discuss anything that would in any way affect the ongoing work of the Commission.
Bain continues to stand by the value and rigor of its work – not as a point of pride– but out of a sense of mission that our South African associates wanted to bring to that organization. We worked hard because we wanted to help SARS become an even better organization and we believe our work could help to do that.
We have listened with concern to the testimonies of SARS employees who feel they have been mistreated and disrespected, at their frustration and pain and the consequences this has had on the lives of these individuals and their families. We are dismayed by the way our work has been used to further a different agenda than was intended. In our recommendations, there was no need for any lay-offs or terminations. This didn't turn out to be the reality when the model was implemented. We are deeply sorry for how this turned out – we wish we had known then what we do now.
We contend that this could have been avoided. Through the various Commission testimony, we now know that essential elements of delivering a successful operating model were not systematically addressed, causing the failure at SARS.
As we stated in our testimony, Bain believes that the success of an operating model for an organization is a function of defining and implementing all elements of the model correctly: leadership, organization structure, accountabilities and decision processes, governance forums, core values/ways of working, capabilities, business processes, and IT systems. We raised this with SARS, but Bain's contracted work on the operating model covered only one aspect, organizational structure, whilst SARS handled internally all other aspects of the process. This point must not be lost nor is the fact that the design principles for this structure was presented to and reviewed by SARS's independent Advisory Board instituted by the Finance Minister.
In hindsight, as we reflect on our role at SARS there are several places where we could have done better. We could have listened better. We could have pushed SARS harder to acknowledge and address the risks we raised. We could have been more aware of agendas that could have diverged from the mandate we were given. These are lessons we have already taken to heart.
These last few weeks have been difficult. There is a growing frustration within our firm that we did not recognize the possibility that we may have been used to further a political or personal agenda. We always go into our work presuming our clients have good intentions. We are now questioning these beliefs as it relates to SARS.
As a firm, we stand by the work we produced and the dedicated effort of our employees who wanted nothing more than to make SARS a better place. We will continue to cooperate with the Commission of Inquiry to support a process aimed at restoring SARS to the once credible institution it was known as.
Bain South Africa serves a broad range of clients across the continent’s largest, most rapidly changing sectors. We operate in conjunction with our Lagos office as Bain & Company Africa. Since 1997, we have collectively completed more than 350 projects throughout sub-Saharan Africa, and our diverse client portfolio includes multinational organizations, JSE Top 40 firms and state-owned enterprises. Our consulting and pro bono work supports the continent’s broad transformation agenda, and we’re proud to be a Level-3 B-BBEE contributor.
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At the Johannesburg and Lagos offices, we are committed to contributing to the betterment of local society. Simply put, we believe that what is good for Africa is good for Bain. As a result, we work on issues that are critical to South Africa and Nigeria, particularly efforts that improve the social and economic conditions of those in need. We focus on issues where we can have the greatest impact: those that ignite our passions as a Bain community and that leverage our strategic capabilities.
In the spirit of breaking down barriers between communities and offering hands-on help, Bain Africa contiues to participate in Mandela Day. Bainies spend time working with organisations, putting creative, consulting and childcare skills to good use. In the past, we've put out fires next door to TLC Children's Home, painted jungle gyms at Ekupholeni Trauma Centre and Kliptown Pastoral Pre-School, tested business ideas and strategies at The Hub and the Branson Centre of Entrepreneurship, and tested our muscles during rubbish clearing in Kliptown.
Bain Africa continues to make sizable contributions to local organisations through formal pro bono casework. Working with organisations like Endeavour South Africa, the local arm of a global nonprofit organisation that identifies and supports high-impact entrepreneurs in emerging economies, and m2m, an organisation that works to impact the health of mothers and their babies through education and employment.
Our fundraising is currently focused on payroll giving to select South African charities, and support through national observance days. We hold regular in-office events to raise money for and awareness of such organisations. Examples include the sale of Casual Day stickers through the National Council for Persons with Physical Disabilities and the sale of bandanas through the Sunflower Fund (to support leukemia and other blood cancer patients).
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