Government guilty of double standards when it comes to banning corrupt companies

Daily Maverick

6 days ago

The government has an inconsistent and deeply troubling approach when it comes to sanctioning companies that betray the public trust through corruption and poor standards of service delivery. One need only look at the Bain & Company debacle to see this in stark relief.
Bain's role in the hollowing out of the SA Revenue Service (SARS) under Tom Moyane's leadership during the State Capture years is now well documented.
For a long time, nothing was done locally. It took the actions of the UK government, driven by Lord Peter Hain, to finally impose real consequences. Under that international pressure, the SA Treasury decided to place Bain & Co on the government's Database of Restricted Suppliers, which essentially banned Bain & Co from doing business with any level of the state, including local government. This ultimately gave rise to Bain closing its local advisory practice in South Africa in July.
Bain paid the ultimate price for its outrageous and unacceptable conduct during the height of the State Capture years, and it was a long-overdue outcome.
But let's be clear: this decision to ban Bain didn't come from decisive action by our authorities. It came under pressure from the UK government, which banned Bain in August 2022 from doing business with it (the UK government) for three years, on account of its actions in South Africa.
Yet Bain was not alone in its misconduct. Other global giants like SAP, ABB, McKinsey & Co, and KPMG also acted out of line, aiding and abetting the siphoning of billions of rands from Eskom, Transnet, SARS and other state entities. Their transgressions were no less damaging. Like Bain, they apologised. Like Bain, they paid back some of their ill-gotten gains. But unlike Bain, not one of them was barred from doing business with the government.
Why the double standard?
South Africa has a powerful accountability tool at its disposal: the Database of Restricted Suppliers, managed by the National Treasury. Any company or its directors placed on this list is prohibited from doing business with the state. This sanction can have serious consequences — as Bain's closure demonstrates — but it is not used to the extent that it should be applied.
The Treasury will say it only maintains the database, relying on government departments and municipalities to submit the names of companies and their directors that have wronged the state. But this is a weak excuse. If those responsible for reporting misconduct fail to act, the Treasury has a duty to step in, tighten the rules and hold those departments and municipalities accountable for their lack of duty and responsibilities to the country.
The reality is that government departments and municipal authorities that collude with dodgy service providers are hardly going to report their partners-in-crime.
The question which then arises is: should civil society organisations be allowed to make submissions for blacklisting on behalf of the state, if indeed it has accurate facts and can substantiate its reasons for the listing? Otherwise, the Database of Restricted Suppliers remains a blunt instrument, serving a very limited purpose, while essentially allowing billions to be stolen by repeat offenders.
The truth is, the reluctance to use this tool is part of a bigger pattern. It suits those in power to keep the gates open. Real enforcement, whether it's efficient procurement blacklisting or an independent and highly effective criminal justice system, would disrupt the flow of crooked contracts that fund party coffers, line the pockets of connected elites, and feed the political patronage machine.
Bain deserved to be banned. But so do SAP, ABB, McKinsey & Co, KPMG and every other company that colluded with state actors to rob South Africans blind. Until there is consistency, political will and decisive leadership, the plunder will continue, and the Database of Restricted Suppliers will remain a powerful but underutilised weapon gathering dust in Treasury's arsenal.
It is time for Treasury to show that this country is serious about accountability. Until then, civil society will keep asking: why Bain and no one else? DM