Earlier than he was made UK enterprise secretary this week, Jacob Rees-Mogg’s Cupboard Workplace job was to determine Brexit alternatives and enhance authorities effectivity, which he recognized as a chance to go away notes on the empty desks of civil servants he felt shouldn’t be working from residence.
However one of many last selections he made in his outdated job, which additionally included working authorities procurement, was probably the most attention-grabbing. And it had nothing to do with the UK leaving the EU.
Counter-intuitively, Rees-Mogg — the red-tape-slashing, true-blue, small-state Tory — determined to blackball Bain & Firm, the US administration consultancy that received £40mn of contracts from the Cupboard Workplace for Brexit-related work.
Bain discovered itself in scorching water lately over the South African “state seize” scandal: the systematic plundering of state entities, presided over by the then president Jacob Zuma however facilitated by a number of the world’s best-known firms. Two South African commissions have discovered Bain helped hobble the nation’s previously esteemed income service.
Rees-Mogg barred Bain from UK authorities contracts for 3 years on the idea that it was “responsible of grave skilled misconduct which renders its integrity questionable”. Final week, Bain duly filed a authorized problem, arguing that his determination was primarily based on a flawed course of.
It was actually a punchy determination by Rees-Mogg that ought to be worrying for firms caught up in scandals, wherever on the earth.
In banning Bain, the UK has gone additional even than South Africa, the place there have been comprehensible calls to comply with swimsuit. Peter Hain, the Labour peer who has pushed for firms implicated in state seize to face justice, desires motion within the US, the place Bain earns the majority of its revenues, though not from public contracts.
For its half, Bain has argued that the fee’s findings mischaracterised its work and it didn’t wilfully help state seize, though it has beforehand admitted failings and repaid charges from its revenue-service contract.
A number of questions comply with Bain’s authorized problem: did Rees-Mogg exceed his powers? In barring Bain, Rees-Mogg cited his discretionary powers underneath 2015 public contract laws. These are vast, even whether it is uncommon to ban an organization primarily based on one other jurisdiction’s findings.
“The query shall be: has he acted pretty? Has he given Bain a proper to reply? Has he thought of all of the underlying proof?” stated barrister Jonathan Fisher KC. “He must have acted in a quasi-judicial trend, in any other case the danger is the entire thing may come crashing down.”
One other query is whether or not Bain will comply with by way of: will it really need one other detailed exposition of a sorry chapter of its company historical past, this time in open courtroom? Neither is it an incredible search for a consultancy to sue a former shopper.
A much bigger situation which will come to hang-out Rees-Mogg is the sparse regulation of consultants.
Audit regulation has been overhauled within the UK, although the method is slow-going. However for consulting, conflicts of curiosity can go unchecked and when issues go flawed there are only some blunt and opaque options out there, akin to outright bans.
It has been exhausting sufficient to enhance auditing requirements. If Rees-Mogg selected to know the nettle and convey consultants to heel, it actually can be a shock.