Government Contracts: Bain & Company

Question

Asked by

To ask His Majesty’s Government what discussions they have had with the government of the United States of America about the suspension of United Kingdom government contracts with Bain & Company.

Before I answer the Question, I should say that it was a privilege to hear the South African President addressing Parliament yesterday. I hope I speak for others when I say that I found the Lord Speaker’s vote of thanks very warm and well judged.

His Majesty’s Government have not suspended any contracts with Bain & Company; however, following careful consideration in the light of South Africa’s Zondo commission, Bain & Company and its affiliates have been excluded from bidding for procurements for the award of new Cabinet Office contracts for a period of three years. Other departments were advised that exclusion should also be considered for their procurements. I am not aware of any specific UK government engagement with the Government of the United States of America on this issue.

My Lords, first, I thank the noble Lord, Lord True, and Jacob Rees-Mogg—I never thought I would say that—for suspending Bain & Company from obtaining UK government contracts for three years. No company should act illegally abroad—as the South African judicial commission found Bain to have done in deliberately disabling the country’s tax-collecting agency, on the direct instruction of the corrupt former President to protect his cronies and his family—and get government contracts at home. The Government’s action sets an important precedent for other global corporates—that they must act legally and ethically abroad or be barred from taxpayer-funded public contracts at home. Bain is Boston-headquartered and I urge the Prime Minister to press President Biden to follow Britain’s lead.

My Lords, our understanding is that Bain & Company currently does no work for the US federal Government or US federal government agencies and has done no such work since early 2013, but the UK Government are confident that our key ally, the United States, will undertake the necessary due diligence to investigate such matters.

My Lords, it seems to be the settled policy of the Government to cut the size of the Civil Service and then compensate by spending more money on consultancies. Why is this done? Is it because civil servants provide evidence, whereas consultancies tell the Government what they want to hear? Some £60 million has been paid to Bain in the last six years. I understand that £40 million of that was paid for “advice on Brexit opportunities”. Was that value for money?

Bain is not being paid anything at the moment, and I think that in the last year the figure was £2 million. I share the noble Lord’s view that we have to look carefully when we employ consultants to do work that can sometimes be done well within the Civil Service. At the same time, extra expertise is sometimes needed, especially on subjects as difficult as Brexit.

My Lords, I congratulate my noble friend on being persistent in raising this issue at every opportunity. Corruption at an international level needs international co-operation. While the Minister may say that there are no contracts with the federal Government of the United States, the company will certainly do contract work with states within the US. While she is not aware of any discussions with the US Government, can she reassure us that there will be such discussions so that we can tackle this cancer on the world, corruption?

I agree that the noble Lord, Lord Hain, has been a great campaigner on this issue and I thank the noble Lord, Lord Collins, for repeating that. It is very important that we fight corruption at every level, in every way we can. It erodes trust and undermines public confidence, and it does that internationally. I think we have a good record in recent years, under this Government, in raising corruption internationally. I come back to my point that individual countries have to take their own action on exclusion and debarment.

Since I have the opportunity to come back, I would like to say that I am very grateful to the Minister for her response. The US is a key ally of ours, as are other countries in the G7 and the G20; all of them do business with Bain. Surely Britain having provided a lead opens the door for the Government to lobby their colleagues and friends to follow the same policy. Companies which act illegally—in disabling a tax agency in this case—should surely pay the penalty.

On the subject of US relations, I can say that the Prime Minister met US President Biden at the G20 in Indonesia, and they agreed on the national and international importance of the UK-US relationship given the challenging economic times and all the difficulties we face together. The US Government have a suspension and debarment regime to which they devote a lot of resources, and contractors found not to be responsible are suspended or debarred, and the US will no doubt study very seriously the Zondo commission and the steps we have taken in the UK to lead the way on this matter.

My Lords, is it not about time that directors were held accountable for such actions, and that some of them went to jail?

There is corporate law which involves the suspension of directors, but I am not able to speak about it today; it is dealt with by another department. However, our new Procurement Bill improves the arrangements for debarment where exclusion is needed, perhaps because there has been insolvency, dishonesty, impropriety or a serious breach of ethical and professional standards. We will discuss that in this House on Report next week. I think we are moving forward in this area although we have to be fair and balanced, as the UK Government always try to be.

My Lords, as the Minister knows, there is no central enforcer of corporate law in the UK and the whole scene is very disjointed. While the Minister is in the mood to tackle corruption, can I invite her to tell the House whether any of the big four accounting firms, whose tax avoidance schemes have been declared unlawful by the courts, have at any time during the last 12 years been investigated, prosecuted or fined, or have the Government even bothered to recover a penny of the legal costs?

I am grateful to the noble Lord for his comments, but it goes rather beyond today’s Question. However, I can say that the Cabinet Office conducted an in-depth review into KPMG following the finding against the firm of dishonesty in its role in the sale of the Silentnight group of companies. In fact, the review concluded that KPMG should not be excluded because it had carried out self-cleaning measures —that is where a company moves to demonstrate reliability and improve its compliance systems. It is very important that companies can do the right thing, particularly where mistakes have been made.