Presidency raises concern over appointment of Bain & Co by the Energy Council of South Africa

• South Africa’s Presidency, has expressed concern with the recent appointment of Bain & Co (Bain) in the Project Management Office of the Energy Council of South Africa.
• Bain was banned from doing any business in South Africa in 2022 for a period of 10 years for its role in orchestrating the capture of the country’s Revenue Service.

Bloomberg reports that Bain & Co. is trying to repair its scarred reputation in South Africa by supporting the project management office of the Energy of Council South Africa on a pro-bono basis for about the last six weeks. This was confirmed by James Mackay, the council’s chief executive officer, and a council document seen by Bloomberg showed.

Energy Council of South Africa not new to controversy

The Energy Council South Africa (ECSA) claims to represent the country’s energy sector. It is alleged that ECSA was formed following a meeting between Sasol CEO Fleetwood Grobler and Minister of Mineral Resources and Energy Gwede Mantashe either in late 2021 or 2022. It was Mantashe’s idea that there should be an energy council that mirrors the minerals council so that government could engage at a single point of contact with the energy sector of South Africa.

Sasol and Anglo played a key leading role in setting up the council. The founding members make up the country’s biggest air polluters namely, Sasol, Anglo, Toyota, Exarro, Naamsa, TotalEnergies, Eskom IDC, CEF. Each contributed seed capital of R1million except Naamsa (R100k). The EU (European Climate Foundation) and UK’s FCDO oddly, also contributed to the tune of around R6 million each.

ECSA, which was housed rent free inside Sasol’s head office in Sandton in its first years of operation, is accused of driving a fossil fuel agenda. They have since sought to attract members from the renewable energy sector. Link to the full list of ECSA members here.

International independent power producer, Globeleq, is currently represented at board level at the council in the form of John Smelcer who is Interim Chief Development Officer at Globeleq. Globeleq, along with their partners, are currently refusing to pay around R254.8 million outstanding in bid bonds for 12 projects that failed to reach commercial close in REIPPPP Bid Window 5. Read more

The Presidency said that appointment of Bain does not contribute to the engendering of public trust and promotion of good governance, given the well documented role of the firm in state capture and corruption.

In 2015, Bain led a restructuring of the South African Revenue Service (SARS) then under the leadership of Tom Moyane, which resulted in the destruction of a large part of its capacity.

The first revelations about Bain & Company’s involvement in the dismantling of SARS emerged during the Nugent Commission set up by President Ramaphosa in 2018. This commission had to determine, among other things, whether deviations from established processes had unfairly favoured politically connected individuals and/or individuals connected to SARS senior management.

The Nugent Commission had also pointed out in its final report of December 11th, 2018, the lack of transparency of Bain & Company during the investigation.

Author: Bryan Groenendaal