Last week, Bain & Company announced it would shut its consultancy business in South Africa, after struggling for years to overcome the consequences of its involvement in state capture during the Zuma presidency. In this blog, GI ACE research assistant Devi Pillay takes a step back to look at the broader question of the relationships between states and consulting firms, and how these can create risks of state capture and corruption.
In 2022, the consultancy firm Bain & Company was found by the Commission of Inquiry into State Capture, known as the Zondo Commission, to have facilitated corruption in the South African Revenue Service (SARS). This was done by colluding with then-President Zuma and then-Commissioner of SARS, Tom Moyane, to “systematically and deliberately” weaken the institution. The SARS case, the report of the State Capture Commission notes, “offers one of the clearest demonstrations of state capture” and “is a clear example of how the private sector colluded with the Executive, including President Zuma, to capture an institution that was highly regarded internationally and render it ineffective.”
Following the release of the Commission’s report, South Africa’s National Treasury barred Bain from doing business with the state for 10 years. A legal challenge initiated by Bain now appears to be moot, as between the debarment and the backlash they faced from the private sector, they have been unable to salvage their reputation and their business. (The ongoing litigation with the Treasury has, however, delayed the disbarment of other companies implicated by the Commission up until now.)
A wider pattern
There has been a persistent call from civil society organisations in South Africa for management consulting firms embroiled in state capture to be held accountable for their actions, and for the state to rethink how it deals with these firms. In addition to the Bain case, the State Capture Commission heard extensive evidence about the role of McKinsey & Company and its partnership with two local consulting firms closely linked to the Gupta-Zuma network, Regiments and Trillian.
These firms were hired to do financial advisory work for two major state-owned enterprises, Transnet and Eskom. Senior officials friendly to the Zuma-Gupta network – “strategically” appointed by Zuma and his allies within the state – abused their positions of power to award contracts to McKinsey, Regiments, and Trillian, who worked on multi-billion-rand projects – from which the Guptas earned billions in kickbacks. Regiments and Trillian, with the knowledge of McKinsey, paid the majority of their earnings on to the Guptas’ network of money laundering vehicles.
Unlike Bain, McKinsey is still operating in South Africa. Corruption-related charges against the company were withdrawn in 2024, after McKinsey and the senior partner responsible for these projects plead guilty to violating anti-bribery provisions of the US Foreign Corrupt Practices Act (FCPA). McKinsey paid a fine of $122 million and entered into a deferred prosecution agreement with South Africa’s prosecuting authority. (McKinsey, however, hasn’t quite recovered its reputation – late last year, for example, the President called on private sector groups to reconsider working with both McKinsey and Bain.) Prosecutions are ongoing against Regiments, Trillian, and the officials they worked with.
Although Bain and McKinsey both issued some apologies, neither firm has admitted to any real wrongdoing, placing the blame on individual lapses of judgement. These responses have not been received well by the media, the public, nor the anti-corruption sector, and the cases have raised serious questions about how consulting firms are doing business with the state, and the corruption risks involved in these relationships.
Assessing the evidence base
In a forthcoming working paper for GI ACE, I take a close look at the work done by McKinsey, Regiments, and Trillian at Transnet and Eskom. Based on evidence from more than 30 witnesses at the State Capture Commission, this working paper provides a detailed account of exactly what work was done by these firms, how they conducted their business, how they interacted with state officials and politically connected middlemen, and how they became involved in corrupt schemes. I discuss the specific ways in which consulting and financial advisory work can be used to advance corruption within an institution, including the provision of financial services like interest rate hedging and the arranging of loans, and the abuse of “success” or “at-risk” fee models.
In South Africa, and in many other countries, public administration scholars, activists, and reformers within the state have been grappling with the “hollowing out” of the state, the consequences of outsourcing and over-reliance on consultants, and the conflicts of interests involved. But there has been little empirical evidence on just how the use of consultants may be transforming the structures and practices of government. Thanks to the detailed evidence gathered by the Commission, this case study gives us an in-depth look at how these dynamics play out within two state institutions.
A crisis of capacity in state institutions has increased the need to hire consultants to perform work that should be done internally, creating opportunities for these firms to profit – and many corruption risks. These weaknesses have also been exploited by corrupt actors even when capacity does exist, as can be seen in the appointment of McKinsey, Regiments, and Trillian to perform functions that were already being competently handled by internal capacity at Transnet and Eskom, or the appointment of Bain to “improve” a world-class institution.
Consultancies become embedded within state institutions despite the often-clear conflicts of interest with their private sector work, displacing internal capacity and preventing it from being developed in future. As shown by the Zondo Commission evidence, once in place, these firms often collude with officials and their networks to facilitate corruption and state capture.
Evidence about how consultancies work with the state is more important than ever. We need to know what these relationships and ways of working look like in order to identify and guard against corruption risks, state capture, and the unintended consequences of outsourcing – in some cases, essentially privatising – core state functions.
The devastating effects of state capture have rendered many state institutions dysfunctional and has caused many skilled workers to leave the public sector, leading ultimately to an even higher reliance on outsourcing. And despite the exposure and dismantling of certain corrupt projects, many patronage networks are still deeply entrenched in the state, continuing to collude with private firms appointed to supplement state capacity. State capture and corruption are able to take root where there is insufficient capacity or capability; at the same time, they further damage state capacity, creating a vicious, self-reinforcing cycle.
We’ll be publishing our new paper on “Consulting firms, corruption, and state capture: A case study from South Africa” on 23rd September 2025. Follow us here or subscribe to our newsletter to get it first.