Law-enforcement agencies have expressed hope for more coordinated international efforts to combat corruption after global software giant SAP agreed to pay R2.2 billion in restitution and punitive reparations to the South African government for the role of its local subsidiary, SAP South Africa, in state capture-linked corrupt contracts.
SAP Global this week concluded a landmark corporate alternative dispute resolution with the US and South African authorities following its voluntary self-reporting.
SAP’s self-reporting triggered investigations into violations of the Foreign Corrupt Practices Act and legal action taken by the US department of justice (US DOJ) and the US Securities and Exchange Commission (SEC).
According to court documents, SAP and its co-conspirators made bribe payments and provided other things of value intended for the benefit of South African and Indonesian foreign officials, delivering money in the form of cash payments, political contributions, and wire and other electronic transfers, along with luxury goods purchased during shopping trips.
Between approximately 2013 and 2017 and through certain of its agents, SAP engaged in a scheme to bribe South African officials and to falsify SAP’s books, records, and accounts, all with the goal of obtaining improper advantages for SAP in connection with various contracts with the government departments and agencies, including the City of Johannesburg, the City of Tshwane, the Department of Water and Sanitation, Eskom, Transnet, SA Revenue Services (Sars)
Several of these tainted contracts were intermediated by the Gupta family companies CAD House (Pty) Ltd, Global Softech Solutions (Pty) Ltd and Lejara Global Solutions (Pty) Ltd, to whom SAP paid aggregate amounts of more than R100m to secure contracts at Transnet, Eskom and Sars.
The National Prosecution Authority (NPA) yesterday said the total amount of R2.2bn was made up of a number of amounts which SAP had voluntarily agreed to repay to a number of state-owned companies and government departments.
Over and above these restitution payments, SAP will pay R750 million into South Africa’s criminal assets recovery account as punitive reparation payments, in recognition of the social and economic harm caused by its conduct in South Africa.
The NPA’s Asset Forfeiture Unit head, and deputy national director of public prosecutions, Ouma Rabaji-Rasethaba, said the resolution was a bold new step that takes South Africa forward in fighting crime.
“The NPA is committed not only to prosecuting criminals but also contributing to the economic recovery of the country through restitution of the proceeds of crime. Corporate alternative dispute resolutions address both of these mandates of the NPA,” Rabaji-Rasethaba said.
“The present resolution obliges SAP to return all benefits that it received under the corrupt contracts that it concluded. It also subjects SAP to punitive reparation payments that far exceed any fine the South African courts have ever imposed on a company as a criminal sentence.”
US acting assistant Attorney General Nicole M Argentieri said this resolution, which is their second coordinated resolution with South African authorities in just over a year, marked an important moment in the ongoing fight against foreign bribery and corruption.
“SAP paid bribes to officials at state-owned enterprises in South Africa and Indonesia to obtain valuable government business,” Argentieri said.
“We look forward to continuing to strengthen our relationship with South African authorities and others around the world.”
SAP Global admitted to criminal actions of certain former executives and managers in South Africa in corruption and related offences.
In a statement, SAP said it conducted a thorough and extensive investigation into historical misconduct and fully cooperated with the authorities.
The company said it separated from all responsible parties more than five years ago and had since significantly enhanced its global compliance program and related internal controls.
“Our significant remediation efforts, combined with our full and proactive cooperation with the authorities, have led to full resolutions of these matters,” SAP said.
“SAP has zero tolerance for those who do not adhere to the company’s compliance policies and procedures.”
Corruption Watch’s executive director Karam Singh said this was a significant development and victory for corporate accountability for corruption.
“This settlement agreement is as a result of international cooperation between US and South African authorities. The only way we can defeat transnational corruption is the close cooperation between authorities,” Singh said.
“The power of US officials to negotiate deferred prosecution agreements is an important anti-corruption tool which should be replicated where possible in South Africa to deepen the fight against corporations involved in corrupt activities.”