Bain & Company: Public Sector Contracts

Question

Asked by

To ask Her Majesty’s Government what steps they will take to ban Bain & Co from securing further public sector contracts.

My Lords, individual departments and other public sector bodies are responsible for their own decisions in these matters but, at the Prime Minister’s request and against the background of Judge Zondo’s report, officials at the Cabinet Office are actively reviewing this matter. The review process is nearing completion and the final report and recommendations are expected to go to Ministers within weeks.

I thank the Minister for that response but is it not utterly shameful that Ministers are still permitting Bain & Company to bid for multi-million pound government contracts, like those it has won in recent years, when the company has recently been found by a South African judicial inquiry to be guilty of unlawful complicity in corruption under former President Zuma? Surely Ministers must accept an amendment to the Procurement Bill, excluding any company with a record of such illegal behaviour from being awarded British taxpayers’ money, or am I going to get another weaselly response like the one in a letter from Jacob Rees-Mogg?

My Lords, I pay tribute to the noble Lord for his pursuit of this matter and accept that it is important. The company concerned is not a strategic supplier to the Government and is not currently undertaking any substantial work for them. As I have said, the final report and recommendations in relation to this will come and these matters can obviously be discussed on the Procurement Bill, which covers the grounds for exclusion of bidders from public procurement.

My Lords, without wishing to bring Committee stage of the Procurement Bill in front of all your Lordships, the Minister knows that Clause 11 of that Bill clearly identifies “maximising public benefit” as one of the things that a contracting authority must have due regard to. Can the Minister perhaps explain how, when a business such as Bain & Company has clearly minimised public benefit to the whole of the South African nation for the benefit of just a few individuals, we can take seriously a Government who put this in writing and yet have continued to maintain a relationship with Bain & Company?

My Lords, I just gave the House the current position as far as the company is concerned. As long-standing friends of South Africa, the Government will continue to engage South African authorities, business and civil society on a shared agenda of security, economic and social issues, including in the light of the final conclusions of the Zondo report. As I have said, that report is coming within weeks; we will also obviously carefully consider any implications for action in the United Kingdom.

My Lords, the Minister has not answered the question. Why would the Government want to have any relationship with an organisation that has been committing fraud and corruption in other countries?

My Lords, there is a further Zondo commission report to be issued, I believe, later this month and there are grounds for due process. We have engaged with the company, as was set out in a letter from my right honourable friend Mr Rees-Mogg. I can repeat only that the review, about which I have told the House, will issue shortly and, based on a finding of facts, will obviously have recommendations for the Government.

My Lords, my noble friend Lord Hain’s question shows up deficiencies in the Procurement Bill as published. Schedule 6 to that Bill outlines the criteria under which a supplier must be added to the debarment list and cannot be awarded public sector contracts—my noble friend gave an example. Can I draw the Minister’s attention to Schedule 7, which provides for discretion in order to add a supplier to that list? There is really wide scope for discretionary disbarment, even on the grounds of national security, and a lack of clarity as to why it is discretionary and what criteria will be deployed in making that judgment. I listened to the Minister’s response to my noble friend and do not think it really addressed the question as fully as we would like. Given the importance of this issue and the fact that we have the Procurement Bill coming up, can the Minister commit now to publishing additional guidance, which would at least inform its Committee debates, on what considerations will be taken into account where such disbarment is to be discretionary?

My Lords, there are two aspects there. I have answered on the progress so far of the Cabinet Office review of the case following the Zondo commission. As far as the Procurement Bill is concerned, we will of course be discussing these things in Committee and later. In the Bill, we are expanding the scope of misconduct that can lead to exclusion; we are also increasing the time period within which misconduct can lead to exclusion, bringing subsidiary companies into scope of inclusion and making the rules clearer so that contracting authorities can undertake exclusions with more confidence. I look forward to engaging with the noble Baroness opposite and her colleagues in the course of the Bill, and I will seek to address the questions that she has raised as we go forward.

My Lords, unless I have badly understood, which is quite possible, Bain & Co came close to purchasing Liverpool Victoria Financial Services—the bid was finally rejected last December. What powers would the regulators have had, with their oversight of Bain & Co’s behaviour in other countries, to intervene in that potential purchase?

My Lords, I am not familiar with the specific case that the noble Baroness raises. I will seek information and write to her in response.

My Lords, the last question leads on to a point that I would like to ask the Minister about. The St Petersburg International Economic Forum is taking place in mid-June, and a large number of these management consultants are going to be attending it, from one office or another—maybe it will be from their Moscow office. Does it need consideration that these organisations are not being helpful in the grand scheme of things, when the Government have a clear policy on such matters?

I note what the noble Viscount says, but the Cabinet Office review into this specific company will conclude within weeks. We will have discussions on this in the Procurement Bill, and your Lordships will be able to explore these matters at greater length then. Obviously, I am concerned by any suggestion of corruption and misconduct, and we are widening in the Bill the scope of misconduct which can lead to exclusion.

My Lords, the Minister sought in part to assure us, saying that Bain & Company—I think I quote him properly—are not doing any substantial business with the Government. What does “substantial” mean in those circumstances, and were any of these insubstantial contracts agreed after the judicial inquiry in South Africa reported?

My Lords, I am advised that there is not a current contract with central government. If I am incorrect, I will correct that. I am aware of one live contract that Bain has with an NHS trust, which has a contract value of approximately £2 million.

My Lords, I am sorry to pursue this again after the noble Lord’s replies to me and to others, but I remind him that this company, under former President Zuma’s direct instructions, effectively denuded the South African Revenue Service of its capacity to raise taxes, especially from President Zuma’s friends and cronies. This was a complicity in corruption which is inexcusable. It is not good enough to say that a review awaits the final report of the Zondo commission. The Zondo commission’s report earlier this year specifically indicted Bain—I doubt it will have anything more to say about it—and referred the company for prosecution. Surely the Government should not have anything to do with it, otherwise all our words about money laundering and anti-corruption abroad and so on, and our legislation here to try to combat it, will mean nothing, when we are paying taxpayers’ money to companies like this one, as we did only a couple of years ago.

My Lords, we are not paying taxpayers’ money to this specific company. I have said to the noble Lord that I greatly respect the way in which he has been pursuing this; it has been dogged. I am not here to defend actions that took place under the Zuma Government. We are obviously concerned; and we respect the great nation of South Africa. As I said earlier, we will work with it and draw conclusions in our relations both with South Africa and in the UK on this matter.