Global management consultancy Bain & Co. was barred from competing for U.K. government contracts for three years following its role in a corruption scandal involving South Africa’s national tax offices.
The move follows a probe into allegations of widespread corruption and graft during the nine-year period former South African President Jacob Zuma was in power. Zuma has been accused of placing the interests of corrupt associates ahead of those of his country.
An investigation commission concluded Bain, which was pitching for public-sector contracts, “had not told the full story” regarding its collusion with Zuma and former South African Revenue Service Commissioner Tom Moyane and their plans “to seize and restructure” the agency and centralize procurement procedures—changes that would facilitate corruption, according to the commission’s report.
A Cabinet Office spokesperson said in an emailed statement, “After reviewing Bain’s role in alleged state capture and corruption by the former government of South Africa, the Minister for Government Efficiency (Jacob Rees-Mogg) considered Bain to be guilty of grave professional misconduct … in light of the company’s failure to clarify the facts and circumstances of its involvement.”
In a letter seen by the Financial Times, Rees-Mogg told James Hadley, Bain’s U.K. managing partner, “I trust that after three years have elapsed Bain & Co. will have restored its reputation.”
The United Kingdom is the first Western country to announce such a ban. Lawmakers have put pressure on others, including the United States, to follow suit.
The Cabinet Office said Bain is “not a strategic supplier” to the U.K. government. Since 2018, the consultancy has been awarded U.K. public-sector contracts worth up to 63 million pounds (U.S. $76.3 million), including £40 million (U.S. $48.4 million) worth of Brexit consulting work for the Cabinet Office.
The ban, which will likely dent the firm’s reputation more than its finances, will apply retroactively from Jan. 4, 2022.
In an emailed statement, Bain said it is “disappointed and surprised” by the decision and it “will be responding to express our concern about the process and its outcome.”
The company said it apologized for its “mistakes” and added it repaid all fees from the work, with interest, in 2018. The company maintained it did not act illegally and said it has not been charged with any criminal offense.
Bain has since set up a global public sector risk function to monitor how public-sector work is pitched for, as well as a South Africa oversight board to review client and project selection, scrutinize project outcomes for value, and offer advice on corporate responsibility. It has also set up a whistleblowing hotline.
It is rare for the U.K. government to ban a company from bidding for public-sector contracts. In 2013, security group G4S was temporarily barred after it overcharged for work it did not carry out, including the electronic tagging of some criminals who were either dead or still in prison. It repaid the government around £110 million (U.S. $133 million), plus taxes, after undergoing a process of “corporate renewal.”