US DOJ should re-examine Bain – HSF – DOCUMENTS

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US DOJ should re-examine Bain – HSF

Nicole Fritz |

September 19, 2022

Director Nicole Fritz writes to Glenn Leon FCPA, Head of Unit, Fraud Section, about corporate actions in South Africa


September 19, 2022

Last week, the HSF wrote to the US Department of Justice, asking it to take action against Bain & Company, the US-based management consulting firm, for potentially violating anti-bribery provisions. US Foreign Corrupt Practices Act. The letter makes it clear that such action is supported by the findings of the Nugent Commission Report and the State Capture Report.

HSF is asking the DOJ to disclose the nature and extent of its prior engagements with Bain and any determinations it may have made regarding Bain’s eligibility for criminal prosecution. This approach by the US authorities follows the unprecedented three-year ban imposed on Bain by the British authorities, prohibiting him from receiving any work from the UK Cabinet Office.

The HSF believes that accountability for crimes of state capture, and particularly those related to an institution as integral as SARS, must first be carried out by South Africa’s own authorities. But the scale of the harm imposed means that foreign jurisdictions, where they have the powers and capacity, must complement and support South African attempts to uphold justice.

Text of the letter:


Glenn Leon, Esq. Chief,

Head of FCPA Unit, Fraud Section,

Criminal Division, United States Department of Justice

bond building


1400 New York Avenue, NW Washington, DC 20005

By email : [email protected]

September 15, 2022

Dear Mr Leon


Subject: Potential violation by Bain and Company Incorporated of the United States Foreign Corrupt Practices Act of 1977.

I am writing to you as a concerned citizen of South Africa, where I am Director of the Helen Suzman Foundation (“FSS”). The HSF is a non-profit organization which seeks to promote constitutional democracy in South Africa and which in recent years has devoted much of its efforts to defending our fledgling democracy from the influence of corruption. In this regard, I am encouraged by the Biden administration’s release last year of the U.S. Anti-Corruption Strategy (“US Anti-Corruption Strategy”) and the expressed commitment to eradicating corruption at home and abroad.

It is in the spirit of the US anti-corruption strategy’s commitment to “consult and coordinate with representatives of civil society” that I hope we can engage in a particularly egregious case of corruption by a US entity in South Africa – a case which I have been advised warrants further investigation by the Department of Justice (“DOJ“) for potential violations of the United States Foreign Corrupt Practices Act of 1977 (“FCPA”).

The evidence I present is not mere opinion. It is drawn from reports produced by two separate judicial commissions of inquiry, chaired by eminent South African judges: first, the Judicial Commission of Inquiry into the State Capture Report (“State capture report”); second, the final report of the Commission of Inquiry into South African Tax Administration and Tax Service Governance, commonly referred to in South Africa as the “Nugent Commission Report”.


In summary, the facts are as follows: Circa 2012, Boston-based management consulting firm Bain & Company Incorporated (“Global Bath”), through its South African office (“Bath SA”), has struggled to enter the lucrative market of providing consultancy services to South African state-owned companies.

Unable to compete on merit, Bain SA allied itself with an obscure South African intermediary entity, ‘Ambrobrite’, whose directors’ only credentials were their promise – and ultimate delivery – of unprecedented access to the southern president. -African of the time, Jacob Zuma. Bain SA’s relationship with Ambbrrite, which saw several hundred thousand dollars in “business development fees” change hands, generated some 17 meetings with former President Zuma and Bain SA chief Vittorio Massone between 2012 and 2014.

During this time, Bain SA provided valuable pro bono advisory work to former President Zuma’s political party, the African National Congress (“ANC”), producing a party manifesto and conceptualization strategy document that detailed a broad reform program to remake key sectors of the South African economy according to Mr Zuma’s corrupt political vision. Bain SA’s corrupt relationship with Ambbrrite and former President Zuma came to a head when Bain SA engaged in an illegal procurement process for consultancy work with South Africa’s tax collector, the South African Revenue Service (“SARS”).

Long before SARS launched a formal procurement process for consultancy work, Bain SA had already leveraged its paid access to former President Zuma and the valuable work it provided to the ANC. , to set up as a consultant who would ultimately oversee SARS. restructuring to benefit former President Zuma’s personal business interests. It should be noted that at the time, SARS was a world-renowned tax collection institution and did not need to be restructured. Bain SA knew this and, despite openly acknowledging its lack of tax collection expertise, formulated a detailed plan that informed SARS’ illicit restructuring.

Prior to the formal SARS procurement process which began in December 2014, Bain SA had already produced a detailed strategy document for the restructuring of SARS and a “first 100 days” plan for its new leader which has not yet been announced, Tom Moyane. The State Capture Report revealed that Bain SA’s failure to comply with South African public procurement laws was so egregious that its director, Fabrice Franzen, had in fact drafted the criteria against which SARS would ultimately adjudicate bids during of its formal procurement process.

This was not only a flagrant violation of South African public procurement laws, but also a fundamentally anti-competitive business practice. It undermined the rule of law and irreparably tarnished the reputation of a major American company. The HSF has been informed that the FCPA was introduced to combat, among other things, this litany of wrongdoings. Additionally, the HSF has been advised that Bain SA’s corrupt relationship with Ambbrrite merits further investigation by the DOJ under the FCPA for the following reasons:

1. Bain SA may have violated the anti-corruption provisions of the FCPA, doing one or the other or both things in order to obtain consulting work at SARS: buy access to the former president Zuma at Ambbrite; or by offering pro bono consultancy work to the ANC.

2. US Corporate Responsibility Principles attribute the conduct of Bain SA to its Boston-based parent company, Bain Global.

3. Bain Global falls squarely within the FCPA definition of “national concern” and therefore falls within the jurisdiction of the DOJ.

4. Neither the DOJ nor the South African government could have, in the exercise of due diligence, discovered the activities of Bain SA until at the earliest February 2018, when the Zuma administration was replaced. Thus, the five-year statute of limitations applicable to the FCPA does not preclude the prosecution of the case.

In making this request, I acknowledge that in December 2018, representatives of Bain SA and Bain Global approached the DOJ and disclosed, among other information, a truncated report produced by the law firm Baker McKenzie that Bain SA commissioned. as part of an internal investigation. Since then, however, no public statement has been made as to the outcome of this initial approach to the DOJ. Given the great importance of this issue to the South African public – and in the spirit of cooperation so laudable expressed in the US anti-corruption strategy – we would greatly appreciate being informed of the nature and extent of the DOJ’s initial discussions with representatives of Bain SA and Bain Global.

I make this request bearing in mind that Bain SA has seen fit not to release even the truncated version of Baker McKenzie’s report to the South African public. This has left us in the odious position of being forced to accept Baker McKenzie’s analysis and conclusions – which contradict those of the State Capture Report and the Nugent Commission Report – for money. cash, while the DOJ was able to properly apply its spirit to the Full Content of the Baker McKenzie Report.

If it turns out that the DOJ has made the decision not to pursue the investigation of Bain Global, we would greatly appreciate your hearing the DOJ’s reasoning in this regard. The HSF’s position is that the matter even merits reconsideration by the DOJ for the above reasons and given that the State Capture Report revelations only became public this year. I acknowledge that Bain SA reimbursed the approximately eleven and a half million dollars in fees it received for its illicit work at SARS.1 However, I have been advised that the idea that Bain SA can remedy its liability under the FCPA by simply reimbursing its costs is erroneous. Indeed, the harm meriting a criminal sanction under the FCPA is the damage that Bain SA caused to SARS’ revenue-generating capacity.

For this systemic damage, the effects of which continue to be borne most deeply by poor South Africans who need properly funded public services, Bain SA and Bain Global remain accountable.


Nicole Fritz

Director, Helen Suzman Foundation.

Footnotes :

1 Calculated at the exchange rate at the time Bain SA reimbursed the fees in December 2018.

Issued by the HSF, September 19, 2022

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