U.K. Government Backtracks on Bain’s Public Sector Ban

Just six months into a three-year ban from bidding on Cabinet Office contracts, global consulting firm Bain & Company has seen its legal challenge bear fruit in the form of a reversal by the U.K. government.

The firm was accused of involvement in a major scandal in South Africa, where the firm was evaluating the operations of the South African Revenue Service and ultimately recommended a complete restructuring, including closing down key regulatory divisions. Implementation of those recommendations resulted in the destruction of a large part of the agency’s capacity and a subsequent inquiry conducted by President Cyril Ramaphosa revealed that the firm had withheld key information from the commission and accusations that it had masterminded a “state capture” scheme to repurpose state institutions to the advantage of the firm, the government, and its private sector allies.

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The fallout from the scandal resulted in intense scrutiny from the U.K. government and ultimately a three-year ban from bidding on Cabinet Office contracts, with then-Minister Jacob Rees-Mogg recommending that the government ban the firm across all its arms. Bain has maintained its innocence from the beginning of the scandal and had mounted a legal challenge to the ban.

The government maintains the previous administration had a “strong legal case” against the firm given the professional misconduct it was alleged to have engaged in in South Africa. But it has adopted a new position after Bain made promises to improve its corporate governance, with the firm to remain under close monitoring for two years to ensure compliance with the agreement.

Cabinet Office Minister Jeremy Quinn, in a written House of Commons Statement, noted “Bain & Company has welcomed this robust external challenge, to help ensure that going forward their corporate governance is of a consistently high standard, that the self-cleansing actions put in place are operational and that any new issues arising are being managed and communicated transparently.”

The reversal was not without its critics, with Lord Hain, who had previously described Bain’s actions as “despicable,” commenting that he was “very disappointed” by the lifting of the firm’s ban on contracting with the Cabinet Office. Others have questioned the consistency of the decision, given the government’s position that its original case was legally sound.