Nugent: Bain & Company in a dangerous position as evidence piles up
The Nugent commission of inquiry into tax administration and governance at the South African Revenue Service (Sars) has heard more details about Bain & Company’s role in the breakdown of Sars but managing director Vittorio Massone was not available to answer questions.
Massone’s legal representative told the commission chaired by retired Judge Robert Nugent that Massone, who is in Italy, would not be able to attend the hearings for medical reasons. He is in Italy where he is receiving medical treatment.
Massone is at the centre of Bain’s contract to design a new operating model that was allegedly used to break down the efficiency of Sars and resulted in the exodus of highly skilled employees. In his initial testimony he revealed that he had met with suspended commissioner Tom Moyane prior to him being appointed as commissioner.
Evidence leader Advocate Carol Steinberg, reading from Massone’s affidavit, revealed that the first curious meeting between Massone and Moyane happened on Sunday October 13 2013 where the two discussed Moyane’s “ambition to become the next commissioner”. The position had become vacant after commissioner Oupa Magashula resigned in July 2013.
Moyane became commissioner in September 2014.
According to Massone the purpose of the meeting was focused on how to help Moyane achieve his professional goals and a similar approach was taken by Bain when conducting “executive coaching” in the private sector where they help CEOs reach their personal and development objectives.
Massone presented an “outside-in” document on the revenue service entitled Sars 2.0.
According to Massone an outside-in document is a due diligence report made to better understand an organisation prepared using publicly available information.
Referring to slides from the presentation Steinberg pointed out that at this meeting Bain had already had a “proposed new vision for Sars and transformation agenda”.
“It seems that before Bain set foot into Sars the plan was a ‘profound strategy refresh’ nothing on the edges” said Steinberg adding that the theme to transform Sars was recurrent in the presentation.
Massone’s presentation further noted that Sars’ operating model was too concentrated and needed to be reconstructed with a focus on the chief operating officer’s role which was occupied by Barry Hore at the time. This was part of Moyane’s key objectives for his first 100 days in office.
One of the slides from the presentation recommended that Moyane needed to “quickly build a healthy sponsorship spine [a list of people likely to be on board with changes at Sars] while addressing obstacles to change”. The said “obstacles” were reflected as yellow figures labelled “watch out” and red figures labelled “neutralise”.
#SARSinquiry a presentation Bain have to Moyane. To develop a “healthy sponsorship spine”, where you identify individuals that could hamper change, in order to watch out for them and neutralize. BB pic.twitter.com/JqaKDwPThZ
— EWN Reporter (@ewnreporter) September 25, 2018
However, Bain’s Vice President and General Counsel Stuart Min said there was nothing sinister in the term “neutralise”. But rather, he said, it had it do with assessing employee satisfaction and changing detractors into promoters. In other words improving their satisfaction levels of currently disgruntled employees.
“Notwithstanding [Min’s] explanation, we do know that what happened is within the first few weeks of Moyane arriving at Sars. He suspended his executive and by the end of the year there were already some resignations,” noted Steinberg.
On Hore, email chain correspondence found in files that Bain submitted dated September 3 2014 between Massone and his colleagues shows that he rejoiced after Hore resigned from the revenue services.
In this exchange Massone remarked: “Now I am scared by Tom. This guy was supposed to be untouchable, and it took Tom just a few weeks just to make him resign”.
“This email suggests that the more innocuous reading of “neutralise” is not, in fact, the correct one. There seems to have been right from the word go an identification of concentration of power in the COO’s job and an attempt to “neutralise” him and that is to get rid of him and that’s exactly what happened,” Steinberg deduced.
Nugent, who only found out about Massone’s absence on Friday, said he would not send written questions to Massone or call him back to testify because he did not “want to put any person’s health at risk”.
However, the commissioner warned that Bain had put itself in a “dangerous” position because the commission has received affidavits and information in over 20 lever arch files that have raised many questions.
“Bain should be very circumspect by its own position. If we are left with facts, not all explained, we are going to have to come to a conclusion about Bain’s role in this and it might be that we are simply going to have to draw inferences because we don’t have other opinions,” said Nugent.
Nugent added: “It is very capable on the what we have seen thus far that one might make very strong inferences against Bain. Now it mustn’t complain when we do that and they haven’t put information before us”.