Jaundiced Eye – Pain for Bain at Sars inquiry

Look out for the Bain team on television when they testify next week. They’ll be the guys in sharp suits and designer balaclavas.

Management consultants are the people who borrow your watch to tell you the time and then charge you for it.

I know, it’s an old joke. But the reason that the jest has remained spry beyond pensionable age is that it still rings true.

This is a business sector with $600 billion (R8.5 trillion) in worldwide annual earnings, so some consultants presumably do deliver value for money. However, many are simply fast-talking, soft shoe-shuffling hucksters with zero ethics, adding very little real value to the organisations they purport to aid.

Consultancy is big in SA. Many are one-person operations, the experts hired by government departments to do the actual work that deployed cadres and nepotistic appointees are too incompetent or lazy to do.

In many cases, these consultants are the same people who were initially employed in the post, but who have taken retrenchment packages offered to get rid of workers of the wrong hue.

But it is the big consultancy firms that are the big scoundrels. The entire state capture project of the Gupta axis was facilitated by ostensibly respectable international professional services companies – consultants and auditors – that were exposed in the media as being amoral, greedy and sometimes corrupt.

KPMG’s South African operation was brought to its knees, losing 20 listed-company audit clients and having to retrench 400 employees, after becomingly mired in the state capture saga.

Then it was the turn of McKinsey, which earned R1.6 billion in consultancy fees from its dubious work with Eskom.

It has repaid the money, following the National Prosecuting Authority ruling that the payments were illegal, involving crimes such as fraud, theft, corruption and money laundering.

And this week, it became the turn of Bain & Company, one of the world’s most prestigious consulting firms.

Bain has come under scrutiny at the public hearings of the Commission of Inquiry into Tax Administration and Governance at the SA Revenue Service. At best, the evidence makes the consultants look like buffoons.

At worst, they look like mercenaries for hire, tailoring their advice to suit the political agenda of their client.

Bain is said to have failed to consult knowledgeable Sars staff when remodelling critical units at Sars.

Its diagnostic report, which led to a dramatic structural overhaul, “was fraught with misleading, inaccurate and outdated statements”.

Five top Sars officials gave evidence of how Bain’s restructuring had “neutralised” the crucial units dealing with enforcement, litigation and customs.

These units handled the sensitive and complex cases, those of high-profile individuals, the illicit economy and organised crime, such as poaching, drugs, cigarette smuggling and gangs.

Bain’s masterful intervention, which cost Sars a mere R200 million, made this highly specialised work “fragmented” and “factory-like”, the inquiry was told.

Because of the resulting decline in enforcement efficiency, Sars potentially lost “hundreds of millions of rands” in unpaid taxes.

We have yet to hear Bain’s response to the claims.

The firm, which has been dubbed the “KGB of consulting” because of its secretiveness – clients are given code names, consultants are sworn to silence – will give evidence next week.

Look out for the Bain team on television. They’ll be the guys in sharp suits and designer balaclavas.

Maybe they’ll be inspired, like McKinsey, to bring a refund cheque.