JOHANNESBURG - German software giant SAP has reported itself to US law enforcement agencies following its startling admission that it paid about R107 million in “commissions” to Gupta-linked entities after clinching Transnet and Eskom tenders worth about R660m.
On Thursday, Adaire Fox-Martin, a board member who leads SAP’s business in Africa and Europe, among other regions, said they had reported themselves to US authorities responsible for enforcing the US Foreign Corrupt Practices Act.
“As a global company with a commitment to integrity and compliance, the past three months have been humbling for us,” she said.
“The allegations of wrongdoing in our South African business have had a profound impact on our employees, customers and partners, and on the South African public — and we apologise wholeheartedly for this.”
Fox-Martin said SAP had committed to full and complete cooperation with the US Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC).
The admission comes after the company appointed international law firm, Baker McKenzie, in July to investigate allegations that SAP paid kickbacks to secure the State contracts.
The company said to date the probe has determined that between December 2014 and November 2016, SAP concluded two contracts for the sale of software to Transnet and two contracts for the sale of software to Eskom, “each with the assistance of an entity currently understood to have been Gupta-related”.
“In connection with these four contracts, SAP provided software and received revenue totalling approximately R660m, and paid commissions to entities currently understood to be Gupta-related totalling approximately R94m.”
SAP said the amounts actually paid to the third parties totalled about R107m because, “by contract, each commission payment included an amount of VAT for taxes due on the receipt of the funds”.
The company said in December 2016 and June 207, it concluded two additional contracts to provide software and services to Eskom with “the assistance of an entity currently understood to have been Gupta-related. No revenue has been received or commissions paid in connection therewith”.
The multinational corporation said after its initial voluntary disclosure on July 13, Baker McKenzie “has spoken on SAP’s behalf with prosecutors at both the DOJ and SEC, and has started the process of sharing documents and information”.
Fox-Martin said: “We cannot emphasiSe enough how seriously the SAP Executive Board takes these allegations, or how committed we are to managing this process in a transparent, ethical and responsible way.”
When the Baker Mckenzie investigation was announced, the company suspended four senior officials, but no evidence was found against the fourth employee over the Gupta matter, and was free to return to work.
The SAP executive board has since decided to eliminate sales commission on all public sector deals in countries with a Corruption Perceptions Index (according to Transparency International) below 50 with immediate effect. South Africa’s rating is 45.
The company said it would allocate additional legal compliance staff to the SAP Africa market, who will be based in South Africa and report into SAP’s Global Compliance organisation.
“SAP will further strengthen its Compliance Committee in the SAP Africa region, consisting of local management, compliance and other corporate functions, to ensure individual deal sanity and integrity, and promote compliance generally,” the company said.
SAP joins the list of global companies who came under fire for the work they undertook for the controversial Gupta family, President Jacob Zuma’s personal friends, who are accused of capturing key state institutions for their personal gain, and influencing the appointment of cabinet ministers.
Last month, auditing firm KPMG and consulting company McKinsey apologised for their part in the state capture phenomenon and admitted that the work they conducted on behalf of the immigrant Indian family fell considerably short of their standards.
Eskom has said it sought McKinsey and Gupta-linked firm Trillian’s “co-operation” in returning the R1bn and R564m respectively paid to them “unlawfully” in 2016 and 2017.
The power utility has argued that the money paid to the two firms was done so illegally. The matter was likely to be resolved in the courts.
- BUSINESS REPORT