President Cyril Ramaphosa has called on organised business to terminate its partnerships with management consulting firms McKinsey and Bain, citing their role in state capture and corruption.
Business Unity South Africa (BUSA) appointed McKinsey as a supporting partner to the B20 (Business 20), which is the official business community engagement group of the G20 (Group of 20). The B20 develops recommendations and policy proposals that are presented to the G20 leaders for consideration.
South Africa assumed the presidency of the G20 from 1 December 2024 to November 2025. The G20 is an intergovernmental forum comprising 19 countries, the European Union, and the African Union. The G20 summit is scheduled to be hosted in Johannesburg next year.
BUSA represents South Africa’s business community across all sectors, including large corporations, small and medium enterprises, and informal businesses.
The Energy Council of South Africa has appointed Bain & Company to run its project management office.
According to the council’s website, its membership consists of public and private sector key players across various sub-sectors crucial to South Africa’s energy landscape and economy. Members collaborate under the council’s umbrella to address critical challenges and opportunities within South Africa’s energy transition.
In a statement issued on Sunday, Ramaphosa’s spokesperson, Vincent Magwenya, said the Presidency has noted McKinsey and Bain’s appointments “with concern”.
Although the Presidency and the government have no control over the B20 processes, it does not endorse McKinsey’s appointment as a supporting partner to the B20. Similarly, the Presidency does not condone the inclusion of Bain in supporting the activities of the National Energy Crisis Committee (NECOM), which was established by the government, Magwenya said.
The Energy Council supports the objectives of NECOM by contributing expertise and promoting private-sector investment to modernise and stabilise South Africa’s energy sector.
“The appointments do not contribute to the engendering of public trust and promotion of good governance, given the well-documented role of the two firms in state capture and corruption. The Presidency calls on business to reconsider its position and to appoint more suitable partners for these important endeavours,” Magwenya said.
‘An opportunity to re-earn public trust’
The Energy Council’s chief executive, James Mackay, in a notice to members in October, said the organisation had approached the market to provide a well-capacitated project management office, which is critical to co-ordinate business support for major energy sector reforms.
The council requested that the services for the project management office be provided pro bono because of budget limitations. Bain was the only consultancy of the six with which the council engaged to provide a firm commitment of support on this basis, Mackay said.
Cognisant of the reputational risks in working with Bain, the Energy Council undertook a due diligence process and subsequently satisfied itself that the firm had implemented substantial reforms, while several measures were taken to restore its global reputation.
Bain’s restorative initiatives demonstrate its “readiness to contribute positively to society” through projects such as the council’s project management office”, Mackay said. Given the steps it has taken, Bain “should be afforded an opportunity to re-earn public trust and contribute to the South African economy”.
The council said it had engaged with certain large corporates in South Africa, which have completed a similar due diligence and are comfortable using Bain as a provider.
To ensure transparency and good governance, Mackay said a performance contract and detailed scope of work will be signed under a service level agreement for the duration of the work.
Bain will also be excluded from any direct government engagement, including not attending the interfaces with NECOM or government-hosted meetings.
Black Business Council calls for a ban
Earlier this month, the National Prosecuting Authority (NPA) announced it had reached an agreement with McKinsey South Africa, which would pay about R1.1bn into the country’s Criminal Assets Recovery Account, “in recognition of the social and economic harm caused by the conduct of a former employee in South Africa”.
In terms of the corporate alternative dispute resolution, McKinsey will also help the NPA’s Investigating Directorate Against Corruption “by continuing to hand over information and material in its possession”.
Read: State capture: McKinsey reaches settlement agreements with US, SA authorities
Despite the agreement with the NPA, the Black Business Council (BBC) called for a complete ban and blacklisting by the private and public sectors of McKinsey and all other countries that were “fingered in state capture”.
The BBC represents the interests of black professionals and business associations.
“In our view, paying a fine alone is not enough,” the BBC said on 9 December. “The perpetrators should face a jail term if the country is serious about dealing decisively with state capture crime.”
The council said it had noticed “with dismay” that those in private sector – such as BUSA – “who continuously lecture” the government about corruption and corporate governance continue to do business with McKinsey. “This is a serious double standard that should be called out and exposed.”
Last week, the BBC issued a statement criticising the Energy Council’s decision to appoint Bain to run its project management office.
The BBC described Mackay’s comments that Bain would be afforded an opportunity to “re-earn public trust” as “disappointing”.
“This re-earning of trust is selectively afforded to certain companies that are mainly big, while small and black companies were forced to close down. This blatant inconsistency in dealing with corruption is unacceptable.”
The BBC questioned whether the members of the Energy Council – such as Eskom, the Industrial Development Corporation, the Central Energy Fund, and the banks – “support this move of indirectly funding corruption. We will be engaging individually with all these companies to raise this matter sharply.”
Nugent and Zondo commissions
The Nugent Commission of Inquiry, established in 2018, found that Bain played a central role in undermining the South African Revenue Service (SARS) during Tom Moyane’s tenure as commissioner.
Bain was hired to restructure SARS but was implicated in actions that contributed to weakening the institution’s enforcement capabilities, particularly its ability to pursue high-net-worth individuals and large corporations for tax compliance.
Units such as the Large Business Centre and Enforcement Division were either dismantled or rendered ineffective, resulting in massive revenue losses for the state.
Bain’s role at SARS was also scrutinised by the Zondo Commission of Inquiry into State Capture, which confirmed much of the Nugent Commission’s findings and recommended legal consequences for the firm.
Initially, Bain denied wrongdoing but later admitted to “mistakes” in how it handled the SARS contract. The firm refunded the R217m in fees and interest it earned from its work with SARS and stated that it would co-operate with the authorities.
The release of the Zondo Commission’s report led to pressure being put on Bain to resign from Business Leadership South Africa (BLSA), which it did in 2022. BLSA is an association of leaders from South Africa’s largest and most prominent businesses.
National Treasury announced in September 2022 that Bain had been banned from state contracts for 10 years, for alleged “corrupt and fraudulent practices”.
In August 2022, the United Kingdom’s Cabinet Office announced that Bain had been barred from tendering for government contracts for three years after its “grave professional misconduct” in South Africa. The decision was overturned, and the ban was lifted in March 2023.
When private companies agree to support clearly dishonest entities simply due to the fact that such entities will provide services without charge then real questions must be asked as to the rationale and thinking processes of persons in charge of such private enterprise.