My Lords, I commend the speech from the noble Baroness. It was compelling and I hope the Minister will find it so too. I wish to speak to Amendments 184 and 187 in my name and those of my noble friends Lord Hendy, Lady Wheatcroft and Lord Kerslake, to whom I am most grateful. These amendments grant Ministers the power to bar companies which have acted unlawfully or unethically from tendering for public contracts. It is hard to understand why that will not be acceptable to the Government.
The two amendments have the same objective but use different means. Amendment 184 requires a statutory instrument for Ministers to act to bar companies in that way, whereas Amendment 187 enables a quicker route but one that is capable of being challenged if any party considered that the Government had acted unjustifiably. As I say, it is hard to see why the noble Lord, Lord True, would not accept both amendments with acclamation.
It will come as no surprise to either him or many of your Lordships that the particular target I have in mind and which I am angry Ministers have been so
shamefully slow and negligent about—despite the generous remarks about me from the noble Lord, Lord True, in the Chamber following a Question I asked, for which I am grateful and thank him—is Bain & Company. I first raised this scandal in your Lordships’ House nearly six months ago and have tried to get the Government to act on it by barring Bain from accessing public contracts.
It is a global brand and presents itself as reputable global consultancy operating right across the world. Bain has its second-largest office here in London, which has been awarded multimillion recent UK government contracts and has influence across our economy, so this company is particular to us. We should take account of the fact that in South Africa Bain purposefully assisted former President Jacob Zuma to organise his decade of barefaced looting and corruption, the company earning fees estimated at £l00 million or 2 billion rand from state institutions.
South Africa’s state capture commission, a judicial inquiry headed by Chief Justice Zondo, which recently concluded its work, and to which I gave written and oral evidence in November 2019, condemned Bain’s deliberate immobilising of the South African Revenue Service—SARS—as “unlawful”. So concerned is the commission with Bain’s illegal behaviour in the South African public sector that it has recommended that law enforcement authorities examine every public sector contract Bain has had, not just the SARS one, with a view to prosecution.
The Zondo report was devastating about Bain’s behaviour. The evidence,
“bears out the pattern of procurement corruption which has dominated the evidence heard by this Commission. These include … the collusion in the award of the contract between Bain and Mr Moyane”—
he was President Zuma’s crony put in to head SARS and effectively dismember it—
“the irregular use of confinement and condonation to avoid open competition, transparency and scrutiny … and the use of consultants to justify changes that were necessary to advance the capture of SARS.”
As expected there has been an upswell of civil society opposition to Bain’s continued presence in that country. Such public pressure recently forced Bain to withdraw from South Africa’s largest business association in disgrace.
These findings and events are devastating indictments of a company which operates at and influences the highest level of civil service and business around the world, including profitably from our own Government’s contracts for many years, and relies on the trust of its clients to deliver social and economic value.
Yet in South Africa, Bain used its expertise not to enhance the functioning of a world-renowned tax authority, as SARS was acknowledged to be, but to disable its ability to collect taxes and pursue tax evaders, some of them former President Zuma’s mates, all in the service of its corrupt paymasters. The very company which possessed the expertise to bolster South Africa’s defences against the ravages of state capture in fact weakened these defences and profited from it, yet this is the very company that works across our government and economy in the UK, influencing our public institutions and impacting millions of British lives.
Bain would have us believe that what happened in South Africa was the work of one rotten apple, but its South African office’s work was endorsed by leaders in London at the time and in its US headquarters in Boston, and many senior people currently working for Bain in London were in the South African business during the corrupt President Zuma era. Some of the very people who broke public procurement rules, colluded with Zuma and committed a “premeditated offensive” against SARS, as an earlier judicial commission described Bain’s actions, are now working in Bain’s London office through which it consults to our public institutions and businesses, including government departments.
We are not only dealing with the matter of to whom we pay taxpayers’ money, although that is a major issue; what should make us shudder is that we allow these people into the inner workings of our public institutions, including government departments. A company has demonstrated a propensity to act selfishly in its own commercial interest at the expense of public good. This is what Bain South Africa did, and it led to the devastation that followed. This is a warning to us all.
Given the scandalous collusion of Bain UK and Bain USA, I am asking that the UK Government and the US Government immediately suspend all public sector contracts with Bain and bar it from entering any new contracts. I wrote to the Prime Minister in February of this year requesting this, which resulted in Cabinet Office officials meeting with Bain. Subsequent to this meeting, the right honourable Jacob Rees-Mogg wrote to me in March this year and was clearly swayed by Bain’s superficial internal changes and repayment of only a tiny fraction of the fees that it had earned from South African public sector contracts in the corrupt Zuma era. Using weasel words, he assured me:
“The Cabinet Office continues to monitor the situation and will engage with Bain & Co again … to determine the most appropriate set of actions.”
To date, I have not heard anything about what has resulted from this monitoring or what set of actions has been determined. It sounds to me like Ministers are shelving any action, which is disgraceful if true, although I am encouraged that Mr Rees-Mogg has now invited me to meet him this Wednesday to discuss these matters.
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However, Bain’s shockingly shady behaviour in South Africa is just the tip of the iceberg. The prodigious decade of looting, corruption and money laundering under former President Zuma would not have been possible without the complicity of additional global companies such as KPMG, McKinsey, SAP, the law firm Hogan Lovells and the banks HSBC, Standard Chartered and Bank of Baroda. These fee-clutching, global corporates and turn-a-blind-eye Governments—from London and Washington to Dubai, Delhi and Beijing—helped rob South African taxpayers, contributing to a catastrophic loss of around a fifth of its GDP. Economists estimate the full cost of the Zuma state capture to be a monumental £750 million, or 1.5 trillion
rand. The Government’s total annual expenditure is just 2 trillion rand, and 1.5 trillion rand was the cost of that looting and corruption.
These global corporates, like Bain, all obtained sweetheart state contracts, which helped Zuma’s business associates, the Gupta brothers—who have belatedly been arrested in Dubai and now await extradition to South Africa; we will see whether that happens—to loot the state. I also welcome the fact that UK Ministers have imposed sanctions against them, which I have been requesting since I first exposed their activities to your Lordships nearly five years ago in November 2017. Global banks such as HSBC, Standard Chartered and Baroda transferred this looted money through their digital pipelines to less regulated jurisdictions such as Dubai and Hong Kong, or British Overseas Territories in the Caribbean, to then clean the money by mingling it with other funds, disguising its origins and enabling it to be more easily spent.
Lawyers and accountants assisted the Guptas to set up complex shell, or front, companies, hiding their true owners—the Guptas or their associates—and enabling money to be moved to a country where there is low transparency. Dishonest audits left suspicious transactions hidden. Estate agents received and processed laundered money during the Gupta property purchases in Dubai and India, as well as other places. Global brand names, from KPMG to McKinsey, from HSBC to Standard Chartered—and Bain of course—all profited while the Guptas hid and spent stolen funds that could otherwise have been destined for essential South African public services, job creation or infrastructure, leaving the country’s public finances near bankrupted and its growth completely stalled.
Unless the United Kingdom, US, Chinese, Indian and UAE Governments co-operate with each other, state capture will happen again, either in South Africa or other countries. The truth is that international criminals continue to loot and launder money with impunity through centres such as London, New York, Hong Kong, Delhi and Dubai. I am afraid that UK Ministers talk the talk on corruption, but refuse to take the necessary tough action against guilty big corporations to stop it. That also goes for other Governments I have mentioned.
I draw my remarks to a close by saying that, meanwhile, financial crime is estimated by the United Nations Office on Drugs and Crime to be worth around 5% of global GDP, or $2 trillion, each and every year. We have an opportunity to stop this onslaught, at least as it relates to Bain and any other corporate complicit, and to make an example of the company. Bain continues to refuse to make full disclosure in South Africa and refuses to make amends for the terrible harms it has done. It similarly refuses to make amends to its former senior partner in South Africa, Mr Athol Williams, who acted with integrity to offer it guidance in taking right action and then, owing to its refusal, was forced to blow the whistle at great personal and financial cost. Mr Williams testified before the Zondo commission and was praised by the commission in its report, but he bears the burden of Bain’s defamation and has now had to flee to the UK for his safety. I hope that he will be able to meet Mr Rees-Mogg on Wednesday, as I
have asked.
I therefore find it completely unacceptable that Bain is licensed to operate commercially in the UK, the USA or anywhere else in the world, at least until it has repaid all of its £100-million fees earned from the South African state during the Zuma/Gupta years, made full amends and answered charges in the courts here.
These two amendments are designed to encourage UK Ministers to clean up public sector contracts by ensuring that taxpayers’ money is spent on companies with high standards, not ones with grubby standards, such as Bain. I ask that the Minister accepts them and pursues this matter with his colleagues in the Cabinet Office. I will happily discuss privately with him any drafting changes that might be required to satisfy the Government’s requirements in this Bill, but I think it necessary that Ministers provide leadership on this, particularly by making an example of Bain, or else everybody else will think that they can do the same thing.