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The Labour government has tried and failed to reimpose a ban on consultancy firm Bain & Co working for the British state despite ministers’ concerns about its past “misconduct” in a major corruption scandal in South Africa.
Pat McFadden, Cabinet Office secretary, said he had requested legal options to bring back the ban on the company, only to be told that there were “no legal routes to do so” without any new information about the relevant case.
Bain, a Boston-based global management consultant, was given a three-year ban from tendering for British government contracts in August 2022, when Boris Johnson was prime minister.
Jacob Rees-Mogg, Cabinet Office secretary at the time, justified the intervention on the basis that “Bain & Co is guilty of grave professional misconduct which renders its integrity questionable”.
An inquiry by Raymond Zondo, then South African deputy chief justice, into the country’s biggest post-apartheid corruption scandal found that Bain helped to undermine the country’s revenue service through advisory work that helped allies of former president Jacob Zuma.
But only six months into the UK ban the Cabinet Office reversed its decision, saying the ban would be lifted for Bain albeit not for its South African arm.
Lord Peter Hain, former UK cabinet minister and anti-apartheid campaigner, who grew up in South Africa, wrote to McFadden before Christmas urging the minister to impose a fresh ban on contracts for Bain & Co.
The Labour peer pointed out that the South African government has suspended Bain from working for it for a decade until 2032. He criticised Bain for refusing to accept the verdicts of two judicial commissions in their entirety.
“Surely Bain should not be permitted to operate public contracts in the UK, at least until it has repaid all the fees earned from the South African state during the Zuma-Gupta [business family] years, made full disclosure . . . and the Zondo-recommended legal action against the company should be completed,” Hain stated.
In his reply to Hain, McFadden said he shared the concerns about suppliers to the British government needing to operate to high standards. “The Zondo commission referred to Bain’s role in Sars [South African Revenue Service] as unlawful and concluded they had engaged in collusion and state capture,” he said.
But the minister said he had requested legal advice on options to extend the ban, only to be told that there were “no legal routes” to do so. “This advice was tested with expert counsel who confirmed that no legal route existed for extension of the ban and therefore the government is unable to do so.”
McFadden said he could not take a further decision unless material new information came to light that had not been considered by the previous administration.
The Cabinet Office minister said that under the Procurement Act 2023 there would be new powers from February this year to take stronger and broader action against suppliers involved in misconduct. “I am actively exploring options for enhancing these powers and further measures to enable the government to take even stronger (action) against suppliers, like Bain, who have committed misconduct.”
Bain & Co said in a statement that it had taken significant measures to strengthen its governance for public sector contracts since its work with Sars from 2015 to 2017.
“While there were no findings from two official commissions of inquiry of any illegal actions by Bain, we accepted responsibility for the events at that time and repaid all fees, with interest, to Sars,” it said.
Hain said he was “frustrated” but understood the reasons for McFadden’s conclusions. “Bain should take no comfort. Their reputation remains toxic.”
A government spokesperson said: “Whilst decisions on the exclusion of Bain from bidding for UK government contracts were made by the previous government, the government will take strong action against any future supplier misconduct wherever it is found, and will provide a further update in due course.”
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