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US fines SAP R4bn in corruption, bribery schemes

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 11 Jan 2024
SAP made bribe payments and provided things of value to South African government officials.
SAP made bribe payments and provided things of value to South African government officials.

German-multinational software giant SAP has agreed to pay a criminal fine of over $220 million (R4.1 billion) to the US, following investigations into corruption committed in seven countries including South Africa.

According to a statement released by the US Justice Department, SAP will pay the fines to both the US Securities and Exchange Commission (SEC) and the US Justice Department following its violations of the Foreign Corrupt Practices Act (FCPA) arising out of corruption and bribery charges in SA, Malawi, Kenya, Tanzania, Ghana, Indonesia, and Azerbaijan.

The Justice Department says SAP has agreed to a pay-out of $118.8 million in criminal penalties and administrative forfeiture of $103.3 million, as per the department’s resolution, which is coordinated with prosecutorial authorities in SA, as well as with the SEC.

According to the US Justice Department, SAP entered into a three-year deferred prosecution agreement with it, in connection with criminal information filed in the Eastern District of Virginia charging the company with two counts. These are: conspiracy to violate the anti-bribery and books and records provisions of the FCPA relating to its scheme to pay bribes to South African officials, and secondly, conspiracy to violate the anti-bribery provision of the FCPA for its scheme to pay bribes to Indonesian officials.

“SAP paid bribes to officials at state-owned enterprises in South Africa and Indonesia to obtain valuable government business,” says acting assistant attorney general Nicole Argentieri of the Justice Department’s Criminal Division.

“Today’s resolution—our second coordinated resolution with South African authorities in just over a year—marks an important moment in our ongoing fight against foreign bribery and corruption. We look forward to continuing to strengthen our relationship with South African authorities and others around the world. This case demonstrates not only the critical importance of coordinated international efforts to combat corruption, but also how our corporate enforcement policies incentivise companies to be good corporate citizens, by cooperating with our investigations and appropriately remediating, so that we can take strong action to address misconduct.”

Falsifying records

According to the US Justice Department, 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.

“Specifically, with respect to South Africa, between 2013 and 2017, SAP, through certain of its agents, 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 South African departments, agencies, and instrumentalities, including the City of Johannesburg, the City of Tshwane, the Department of Water and Sanitation, and Eskom,” notes the statement.

In 2022 ITWeb reported that SAP was fined R263 million by the Special Tribunal SA, which was mandated to recover public funds syphoned from the fiscus through the software company’s corruption, fraud and illicit money flows in SA.

This, after the software licence and support agreement between the Department of Water and Sanitation (DWS) and SAP was declared constitutionally invalid and set aside.

Last year the DWS fired a senior official following an internal investigation of the SAP contract.

In a statement published on its Website yesterday, SAP confirms it entered into final settlement agreements with the US Department of Justice, the US SEC, and South Africa’s National Prosecuting Authority.

The company further points out it separated from all responsible parties more than five years ago,and has since significantly enhanced its global compliance programme and related internal controls.

“SAP welcomes the conclusion of these matters and will fully comply with the terms of the agreements. As noted in the settlement agreements, SAP conducted a thorough and extensive investigation into historical misconduct and fully cooperated with the authorities.

“SAP has zero tolerance for those who do not adhere to the company’s compliance policies and procedures. SAP remains vigilant in maintaining the highest standards of ethics and compliance,” it states.

Donald Alway, assistant director in charge of the Federal Bureau of Investigation’s (FBI) Los Angeles Field Office, adds: “This successful resolution against SAP is another example of the power of relationships and persistence.

“The sustained diligence by the prosecution team and continuous collaboration with South African law enforcement, regulators, and prosecutors identified corrupt activity in multiple countries. The FBI will continue our non-stop efforts to identify, investigate, and prosecute companies wilfully engaging in corrupt activities around the world.”