CAPE TOWN - Alleged corporate corrupt transactions, especially those involving global conglomerates with the likes of KPMG, SAP, McKinsey, ABB and Bain & Company, to name a few, keep on hitting the headlines of news publications.
All eyes are on the Minister of Finance, Malusi Gigaba, when he delivers the Mid-term Budget Speech on October 25, where Business Report expects him to announce another rescue plan for SAA. Business Report also expects Gigaba to announce the Public Investment Corporation list of companies invested in.
Business leaders that Business Report spoke to over the weekend, requested us to urge Gigaba to address alleged corrupt transactions at the Treasury, SAA, Eskom, Transnet, Prasa, the Central Energy Fund (and its sister companies the Strategic Fuel Fund and PetroSA).
Alleged corruption at SAA is not breaking news anymore. When Coleman Andrews was appointed in 1998 by Saki Macozoma, at the time the managing director of Transnet, South Africans were convinced that this American consultant would turn SAA around, for the better. Fact is that Andrews had his own plans to milk South African taxpayers from day one. He appointed his own company, Bain & Company, as consultants, paying them, and himself, and possibly some politician(s), a healthy commission. Andrews left months before completing his term, with a fat bonus, and travel on SAA back to the US.
Fin24 published an article “A scandal has surfaced in South Africa over the (then) R232.2million ($29m) remuneration package of SAA’s former chief executive Coleman Andrews and allegations of corporate mismanagement. It follows revelations about Andrews’s remuneration and R243.1m paid to consultants he appointed, including R208.9m to US consultants Bain & Company and R118m paid to nine expatriates appointed to key SAA positions”, 18 months after Andrews’ contract was cut short.
The scary part is that Bain & Company is back, or, never left or fled the country on the same flight with Andrews. In fact, this time, Andrews hits back and is aiming for the Treasury. This appointment was made by the previous Minister of Finance, Pravin Gordhan.
Bloomberg reported recently “South Africa hired Bain & Company to advise on the strategy and corporate structure of the country’s three loss-making state-run airlines to improve the benefit to the state from owning the carriers. Bain, based in Boston, was awarded the contract as part of a joint venture with a South African company, Abacus Advisory, according to a posting on the National Treasury’s website.
Abacus needs to be investigated. A disgruntled source in the Treasury recently revealed to Business Report that millions were paid in consulting fees to Abacus Advisory per month. The source said “Abacus draft the tenders, they have an office at the Treasury, and are successful in winning most of the tenders. This upsets the competent staff at Treasury”.
Abacus Advisory’s list of clients on the company website includes Treasury and the controversial R9billion Job Fund. Business Report recently reported on the alleged corruption regarding the R28bn Integrated Financial Management System (IFMS) and the vague manner the Treasury reports back on successful implementation of the R9bn Jobs Fund. It seems as if no company can be held accountable for billions spent on “consultancy and restructuring”.
To invite Andrews and his alleged corrupt Bain & Company back in South Africa is to open the door for further headline corrupt transactions. Gigaba will hopefully take note of this and address, among others, these allegedly corrupt practices.
Gigaba agreed to address selected business leaders at an exclusive Business Report Ignite business breakfast in Cape Town on October 26 in Cape Town.
Adri Senekal de wet is the Executive Editor at Independent Media Business Report.