Deep Collusion: Bain and the capture of South Africa

By Athol Williams

Drawing on his testimony before the Zondo Commission, Williams reveals the full extent of what Bain did not want the public to know. 
Deep Collusion uncovers the inner workings of state capture design. While this book exposes corporate corruption and lifts the lid on foreign profiteering and the weakening of South Africa’s public institutions, it also highlights the lonely burden of the whistleblower and the great personal cost of telling the truth in the face of overwhelming pressure.  
 

• Language: English
• Publisher: Tafelberg
• Release date: Nov 1, 2021
• ISBN: 9780624092001

Athol Williams

Athol Williams was born in Cape Town, South Africa. He is the first person to earn five master's degrees from five global top-ranked universities. He is the founder of the Institute of Social & Corporate Ethics and co-founder of Read to Rise, an NGO that promotes youth literacy. 

Book preview

PART A:

Bain, the SARS Crisis and My Involvement

CHAPTER 1

Worst fears playing out

My oldest friends at Bain joke that they just can’t seem to get rid of me. I am sure I hold some record, not just at Bain, but with any employer for having joined the company on five separate occasions over a 24-year period. This back-and-forth points to my varied professional tastes as well as the relationship of mutual value and respect that developed between me and the firm over many years.

I first joined Bain in 1995 at the firm’s global headquarters in Boston in the US. I was halfway through a two-year MBA at the MIT Sloan School of Management when I was selected as one of three MIT students to spend ten weeks working with Bain as a summer associate, an internship programme that Bain ran for MBAs from the top US business schools. We were a cohort of 25 with the majority from Harvard and Wharton. At that stage the ten weeks I spent at Bain was by far my most rewarding professional experience and rank among the best of my career.

Bain was unknown to me until I arrived in the US in 1994 and started at business school. Just three months after Nelson Mandela was inaugurated as the first democratic president of South Africa, I left the country for the first time to embark on an MBA. I had graduated from Wits University with an engineering degree two years earlier. I would be one of the youngest students in my MBA class of 250, who hailed from 53 countries.

Though much smaller back then, today Bain employs 11,500 staff in 58 offices around the world, and generates an estimated $4 billion in annual revenue according to Forbes. Like its closest rivals, BCG and McKinsey, Bain works with CEOs and executive teams across every industry to drive financial and operational performance. Consultants are highly analytical business advisers who understand how organisations and markets work and are skilled at identifying opportunities for value creation and supporting their clients in capturing that value. Management consulting is a unique segment of professional services, distinct from accountants, auditors, lawyers, and marketing and public relations firms. The consulting industry is unregulated with no industry-wide standards or codes of ethics and no professional oversight. There is no qualification standard to enter the profession or independent examination that needs passing. Firms like Bain essentially use the business schools as their first filter and entrance qualification – if you’re good enough to finish at the top of your MBA class at MIT or Harvard, you’re good enough for Bain. Recruiting from the elite business schools also ensures that Bain has access to consultants from the upper echelons of society, which helps the firm maintain its desired elitist culture. This also gives the firm access to potential clients in the consultants’ social circles. The culture was all gold cufflinks, Armani suits and Montblanc pens. This was a foreign world to me – the outlier from Mitchells Plain in the Cape. Friends teased me that it was obvious that I was a brilliant consultant because Bain clearly did not hire me for my sophistication or social circle.

Unlike spending on auditing, legal and some other professional services, which are largely required by law, all spend on management consulting is discretionary. Many companies use consultants only occasionally and some never do. For better or for worse, many of the largest and most successful companies around the world use management consultants extensively.

Thinking back to early 1995, I wrote in my autobiography, Pushing Boulders: Just the thought of possibly working at Bain made my head spin with excitement. The firm was one of the most prestigious strategy firms in the world. This would be no ordinary job, it would catapult my business career. This is how most consultants view their careers at the top firms – just a few years at one of these companies, combined with a high-quality MBA, will set you up for the rest of your career. Many Bain alumni go on to hold CEO and other senior executive positions in major companies if they decide not to stay with the firm. This was my experience – with Bain on my CV, I landed senior executive roles at Rio Tinto, RMB Corvest and Old Mutual, where I was appointed as strategy director.

At the end of my internship in 1995 I was presented with a letter which read, Congratulations! We are pleased to offer you a full-time position as a consultant in the Boston office of Bain & Company. I had received the coveted offer to join the firm on a full-time basis. Never in my wildest dreams did I imagine working for such a prestigious firm in the US, earning an annual package in excess of $100,000. Today a consultant straight out of business school could expect a package of around $200,000, with the average partner earning around $1 million per year.

Added to the delight of the full-time offer, I was selected from among the summer associates to be profiled in Bain’s recruiting and marketing materials. As a result, my face, along with the caption People distinguish the way we work, and a brief biography appeared on all of Bain’s recruiting materials for the following two years, as well as on the firm’s website and other business publications. Never before had I felt in such demand and so valued – a far cry from my racist experiences in Roodepoort, Krugersdorp, Elandsfontein and Bronkhorstspruit during my years as a young mechanical engineer with the misfortune of being black.

Many years later I would synthesise the traits of the perfect Bain consultant as someone who combined analytical intelligence with personal insecurity. While consultants are ambitious and driven individuals, only a desperately insecure person would work eighty hours a week, including weekends and holidays, knowing that every six months they would face an evaluation that could lead to expulsion from the firm. This is why few consultants dare challenge what the company does. I was the ideal candidate after years of oppression under apartheid. I had literally lived my entire life to that point in a society where everything was designed to make me believe that I was inferior and inadequate. I felt vindicated by my success at MIT and Bain, and Bain earned strong loyalty from me for offering me a platform from which to develop. My insecurity was heightened by the fact that my US work permit was tied to Bain, so if I did not perform I would have to find another company willing to follow the arduous process of securing a work permit for me, or I’d have to leave the country.

My second stint at Bain started three days after my MIT graduation in June 1996, when I took up my full-time position as a consultant. The working environment was intense with enormous pressure to deliver. Leaving the office before eight at night was frowned upon. Sixty-five-hour weeks were typical and working an eighty-hour week was not unheard of. Like many professional services firms, Bain inculcated a work-hard, play-hard culture; and the hard work was very well compensated, with Bain consultants ranking among the highest earners in any market. The counterbalance was that, like its peers, Bain followed a ruthless up or out performance management policy where under-performers were actively managed out of the business on a systematic basis. Despite its demanding work environment, Bain is the only company to be ranked by Glassdoor³ in the top four best US employers for twelve years. This places the firm consistently above admired companies like Google, Facebook and Microsoft, and above its management consulting peers. Glassdoor’s website contains a quote along with Bain’s top position designation: Bain really lives and breathes its values … What these values are would become a central issue in the Bain saga that played out in South Africa.

After a year at the firm I received an amazing offer to join Rio Tinto, the mining conglomerate, at its corporate headquarters in London. After two years there, I decided to return to consulting and cashed in the open offer Bain had made me on my departure to return. And thus, in September 1999 began my third period of employment at Bain. My corporate finance and investment experience at Rio Tinto would stand me in good stead with Bain clients in capital-intensive industries and with private equity investment firms. I was excited to be back: it felt like I was coming home.

Towards the end of 2001 I thought it was time to return to South Africa. I had been away for seven years and was missing my family. Joining the Bain office in Johannesburg made the most sense, but the timing couldn’t have been worse since Bain was winding down its South African business. So, it was time to move on from Bain again. Back home I started a management consulting firm, Taurus Associates, leveraging all that I had learned at Bain and playing to my passion of combining finance and strategy. A black-owned consulting firm with our pedigree was unique, which contributed massively to our success. Within a few years we had an enviable list of blue-chip clients.

During the second half of 2009 I was again approached by Bain, represented by Alan Bird and Tiaan Moolman. This time they were planning to re-establish a presence in South Africa and wanted me to be part of the leadership team. Bird had been a partner in the South African business before it closed in 2002 and was now based in London. I knew Moolman through our Bain connection, but I had also invested with him in a business venture a few years earlier. Moolman features prominently throughout my involvement with Bain over the SARS and state capture drama. My focus had shifted away from business and I had just started a PhD at Wits in the field of social development, but the exciting proposal to rejoin my old firm and build the business in South Africa was hard to turn down. The clincher was the realisation that I could use the income from Bain to fund the social development projects that I had been working on. So in September 2009, I rejoined Bain for a fourth time. I became the first local partner that Bain had appointed in South Africa. Moolman would be appointed partner as well a short while later. This felt like it would be a long stay because I’d be contributing to economic development at home through my consulting work while being able to fund social development projects.

Initially Moolman and I were the only partners based in the office while we relied on partners from other Bain offices and senior contractors to deliver client work. This changed early in 2010, when Bain transferred a partner from Italy to head up the South African business. Enter Vittorio Massone. Massone had never been to South Africa before and had no connection to the country or its people. Bain announced my joining and Massone’s arrival with great fanfare in print, radio and TV interviews. But soon after his arrival, Massone started clashing with me and Moolman as well as other senior people in the fledgling office. As I would later testify before the State Capture Commission, Massone displayed arrogance towards us with an all-knowing attitude – this from someone who had no clue about the local market. He was disrespectful towards staff and service providers, particularly to women. He did not display what I and others had come to expect of a senior Bain partner. We raised our concerns with Massone’s boss, Paul Rogers, who was based in London. So grave were our concerns that eventually Rogers came to Johannesburg to assess the situation. In a room at the Melrose Arch Hotel, I and others shared our experiences and concerns. Massone was called into the room and again some of us expressed our reasons for feeling that he was not suitable to lead the business. I was sure that Massone was going to be asked to leave, but to my astonishment he was retained. Later I would fly to London to implore Rogers to reconsider, but there seemed to be reasons, which were not communicated to me, for wanting to keep Massone in his role.

I was unhappy. I tried to continue working in the office but could not tolerate the toxic environment. Even my long-term clients complained about the arrogance displayed by Massone and visiting partners from Europe. To relieve some of the tension I transferred to the London office for a few months during the first half of 2010, but on my return I continued to find the situation unbearable and I eventually resigned later that year. It was the first time I had resigned from Bain in disgust. Sadly, there’d be another such resignation in the years to come. There were forces at play that I was not aware of, but I knew I could not be a part of what was happening in the business. To be at Bain I had forgone my passion for social development in South Africa, but now it was time for me to get on with this.

Even back then in 2010, years before the SARS saga or allegations of state capture, some of us raised ethical concerns about Massone. These concerns were overlooked by Bain’s global leadership, which left a stain on my view of the firm. What disappointed me most was that Bain’s global leadership endorsed Massone’s position in South Africa and, in so doing, endorsed his behaviour. And, as we will see, they would do so for nine more years.

Between 2010 and 2018 I met with Bain partners occasionally to maintain connections and discuss business. This included my friend and colleague Moolman, as well as Massone. During one of our discussions, Massone mentioned that he had developed a close relationship with President Jacob Zuma, indicating that he had been to his house numerous times. He gave the impression that they socialised together. He was boasting about how well entrenched he had become in South Africa’s power circles. This concerned me given the allegations of corruption and other unethical behaviour that were already then swirling around Zuma. At the same time, it was no surprise that Massone and Zuma would find common ground.

I would write to Bain in August 2018 after the SARS crisis broke: The main reason that I left Bain in 2010 … was my concern over leadership behaviour and attitudes. I had foreseen trouble and would not be part of it. I had fulfilled my ethical duty to raise concerns internally, which led to robust discussions. Bain global leadership had decided that Massone was the right person to lead the South African business, so my decision to leave then was straightforward, even if hard.

Massone’s and Bain’s relationship with Zuma would prove instrumental in leading me to join Bain for a fifth time in 2019. This would turn out to be the hardest and most heart-breaking period for me at the firm. This time it was not about serving clients but trying to guide the company towards making amends for its misadventures. But before rejoining the firm, I played a rather unusual role in overseeing the investigation that Bain had launched into its work at SARS. This role gave me unique insight into what had happened during Bain’s involvement at SARS, and its engagements with Zuma and many other politically connected people.

CHAPTER 2

A credible sucker

Why are you doing this?

I was asked this question repeatedly, by journalists, my wife, friends, my close family, business associates, even Judge Robert Nugent, as well as by many consultants at Bain. It seemed that every reasonable person was perplexed by my risking my reputation to be associated with Bain at a time when it was alleged to have been involved in despicable actions and in lying about them. Just over a week after Massone had testified publicly before the Nugent Commission to Bain’s role in damaging SARS, on 9 September 2018 Bain issued a press statement which included the following:

we have established an oversight committee made up of senior global Bain partners. Athol Williams, a Bain alumnus and a respected independent advisor, will chair this committee on an interim basis. He is a distinguished academic in the areas of corporate responsibility, a corporate leader, and lifelong social advocate. Bain’s contract with Mr Williams calls for him to do what is right for South Africa, without restrictions.

I was right in the thick of an investigation into one of the biggest corporate scandals in South African history. Estimates of what the damage to SARS cost the country in terms of lost revenue ranged from R50 billion to R100 billion. I had seemingly nothing to gain from sticking my neck out, hence the puzzled looks and the frequent questions.

My willingness to get involved was built on a few beliefs. I believed that Bain was a good company that acted with integrity. I believed that Bain wanted to fix the situation in South Africa. I believed that companies must be held accountable for wrongdoing and that they bear a responsibility to make amends for social harms they have caused. And I believed that I could help Bain achieve a good outcome for South Africa and for them too, given my track record with the firm and my knowledge of management consulting, corporate governance and business ethics. I took very seriously the adage that bad things persist because good people do nothing. I considered myself a good person and felt that I could contribute to righting a very wrong situation.

As it turns out, I was the perfect candidate to fall for a con. It’s the oldest story ever told, writes Maria Konnikova in her book The Confidence Game: Why We Fall for It … Every Time, which details the psychology of being conned. The story of belief – of the basic, irresistible, universal human need to believe in something that gives life meaning, something that reaffirms our view of ourselves, the world, and our place in it. I had spent the bulk of the preceding six years immersed in philosophical study at Harvard, the London School of Economics, and Oxford. My head was filled with new ideas and, indeed, new beliefs about new social and economic possibilities in the world. I had been studying, researching and developing ideas for institutional change that advanced social justice in society, and the responsibility borne by corporations to contribute to this change. Helping my former employer through its crisis would enable me to contribute to justice, put some of my theoretical ideas around corporate reparations into practice, and earn some money to shore up my depleted savings from six years of full-time study. These factors combined to prove the truth of Konnikova’s statement about susceptibility to a con: When it comes to predicting who will fall … one of the factors that emerges is circumstance: it’s not who you are, but where you happen to be at this particular moment in your life.

Being home after my years of study abroad gave me the opportunity to explore academic job opportunities, and in time I was appointed as a senior lecturer at the University of Cape Town’s Graduate School of Business, in the Allan Gray Centre for Values-Based Leadership. My plan was that I would teach and conduct research into corporate ethics and ethical leadership and make progress on my PhD thesis. Little did I know that a month later these plans would be scuppered, and I’d be enduring the most tumultuous period of my life.

Just over a month after returning home, on 30 August 2018, I sat gobsmacked at home, staring at my laptop screen, watching Vittorio Massone’s testimony before the Nugent Commission, which was investigating the near collapse of SARS. Bain’s managing partner for South Africa gave bizarre answers to simple questions, and his body language was that of defeat. It was obvious that something had gone drastically wrong at Bain, but exactly what wasn’t immediately clear. I was not surprised. I had already seen this coming in 2010 when I resigned as a partner over my concerns about Massone’s and Bain’s attitude and behaviour in South Africa.

The next day Massone testified again, but even before he gave his testimony I was fired up to take action. I wrote an email to Paul Meehan, Massone’s boss, expressing my disappointment at what I was learning about Bain’s behaviour in South Africa. Meehan was head of EMEA (Europe, Middle East, Africa) for Bain and sat on the firm’s highest executive decision-making body, the Global Operating Committee (GOC). In my email I wrote that the main reason I had left in 2010 was my concern over leadership behaviour and attitudes and that some of my concerns are playing out now. In the email I offered my support, although I mentioned that I am not entirely sure how you might find me useful.

When Bain partner Tiaan Moolman sent an email to Bain’s former employees in South Africa with commentary on the Nugent Commission, I again wrote of my disappointment in an email: I am deeply disappointed in what I am seeing, hearing and reading. This email exchange led to further communication and, combined with my offer of support to Meehan, sparked active discussions about how I could use my knowledge of corporate ethics to contribute to a process to resolve the crisis. I was encouraged by Moolman’s email of 5 September 2018 in which he wrote: There is a very genuine desire from Manny Maceda [Bain’s global managing partner] down to the team in SA left to address the disaster to DO THE RIGHT THING. He wrote about seeking to find the right way forward, true to our values. I was also encouraged by Bain’s press statement of 2 September 2018 in which the firm stated that it was undertaking a deep and extensive investigation into all matters relating to our work at SARS and that it would be completely open and transparent about the findings of this investigation because we believe that is what the people of South Africa deserve. If Bain was willing to acknowledge its wrongful acts and make amends for the harms caused, then I would gladly support its efforts. Furthermore, in its public statement Bain stated that it would cooperate with the [Nugent] Commission of Inquiry and mentioned that it would support a process aimed at restoring SARS to the once credible institution it was known as.

Over the next few days Moolman and I exchanged emails and phone calls. In a call on 6 September, he asked for my advice on handling the crisis and asked me to think about the roles I could play. Any support I offered Bain would come at the expense of my thesis and duties at UCT.

Drawing on my work in corporate reparations, the following day I sent an email to Moolman outlining a process of repair that Bain could follow. In terms of how I could help my old employer, my suggestion was that I advise on a process of repair and solution design and that I keep the process honest. I suggested that in future we could possibly consider a more public or operational role to implement any remedial plans developed. Importantly, in this email I emphasised that I had a hierarchy of interests that put South Africa at the top of my agenda, my own interests second, and Bain’s interests third. In other words, I wanted to ensure from the outset that my involvement would not entail defending or protecting Bain but acting in the interests of South Africa to bring remedy for harms that Bain had caused.

On 7 September 2018, a week after Massone’s bombshell testimony, I travelled to Johannesburg to meet with Bain. At its offices in Melrose Arch, I met Moolman and for the first time got to meet Meehan, who was there from London. Also present was Stuart Min, Bain’s global head of legal affairs based in Boston. Their proposal was that I be appointed as chairman of Bain South Africa. This made no sense to me. Being chairman of a company had governance and legal implications. I sensed the panic and desperation in the men that I was speaking to. We could not settle on what role I would play, but I was there to help in the ways that I had written about to Moolman, who by this stage had been appointed to replace Massone as head of the South African business on an interim basis. Min prepared a letter of intent, which Moolman and I signed. The letter described the intent to enter into a formal agreement but in the meantime stated that I was to observe Bain’s compliance with ethical business practices and professional standards and that I was free to take my concerns to an appropriate third party if I felt that Bain was not addressing my concerns. The appropriate third party would later be defined as the Nugent Commission.

By this stage I had already written to Judge Nugent, introducing myself and offering to support the work of his commission. I also let him know that I was in discussions with Bain. As I told him, "If I can help them

Reviews for Deep Collusion

[Tshepo Seiphetlho · Rating: 3 out of 5 stars]

Brilliantly put together. Learning how people are coached to help in milking the state confirms the key personnel of the state are the undisputed beneficiaries.

I can only wonder if these true stories will wake South African upcoming leaders or not. The young are as corrupt as the old!

[Alyssa C. Kleinhans · Rating: 5 out of 5 stars]

Part exposé, part memoir of exposing. In this book, Williams lays out the damning evidence of how the international consultancy firm Bain and Company—a firm that he loved and dedicated much of his life to—had become not only corrupt but also embroiled in the South African state capture nightmare (primarily with regards to SARS, and to some extent Telkom). He lays out in eloquent, easily-digestible form the disturbing details that only a whistleblower from the inside can do. Williams’s bravery is commendable and a great example of what our society needs more of.

[Nazeem · Rating: 5 out of 5 stars]

It was shocking to read and discover that state capture is such a clandestine criminal activity that is not merely corruption but closer to a government coup. Athol Williams should be recommended for acting with so much Integrity and bravery, risking so much for shining light on the truth. Corporate South Africa need more leaders like Athol Williams and should really be racing each other to have him join their boards.