America to probe SAP

Software giant pledges to work hand-in-hand with US authorities

MULTINATIONAL software company SAP is collaborating with American authorities responsible for enforcing the US Foreign Corrupt Practices Act after being “humbled” by a probe into its South African business.

“To date‚ the investigation has uncovered indications of misconduct in issues relating to the management of Gupta-related third parties‚” SAP said yesterday.

Apart from its voluntary disclosure to US authorities‚ the company has said it was removing commissions on public sector deals in higher-risk countries, including South Africa‚ and has initiated disciplinary procedures against three employees.

It is also beefing up its legal team in South Africa – with staff who will report to bosses overseas.

“As a global company with a commitment to integrity and compliance‚ the past three months have been humbling for us‚” Adaire Fox-Martin‚ a member of the executive board of SAP SE‚ who leads SAP’s business in Middle and Eastern Europe‚ Europe‚ the Middle East and Africa‚ and Greater China‚ 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 and the US Securities and Exchange Commission.

A law firm contracted by the software giant‚ Baker McKenzie‚ initially focused its investigation on SAP’s contracts with Transnet and Eskom‚ SAP said.

“This part of the investigation will conclude by the end of [the year].

“SAP has also invoked its third-party audit rights with entities understood to be Gupta-related – and these audits are in the early stages.” The probe has so far found that: ý Between December 2014 and November last year‚ 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 understood to have been Gupta-related.

ý In connection with these four contracts‚ SAP provided software and received revenue totalling about R660-million‚ and paid commissions to entities understood to be Gupta-related totalling about R94-million.

ý The amounts actually paid to the third parties totalled about R107-million because‚ by contract‚ each commission payment included an amount of VAT for taxes due on the receipt of the funds.

ý In December last year and June this year‚ SAP concluded two additional contracts to provide software and services to Eskom with the assistance of an entity understood to have been Gupta-related.

No revenue has been received or commissions paid in this instance.

Going forward‚ SAP said it had instituted formal disciplinary proceedings against three employees who were placed on administrative leave at the beginning of the investigation in the middle of this year.

“SAP has been clear from the outset that it will not tolerate misconduct or wrongdoing,” it said.

The SAP executive board has also decided to eliminate sales commissions on all public sector deals in countries with a Corruption Perceptions Index (according to Transparency International) below 50. South Africa’s rating is 45. SAP will allocate additional legal compliance staff to the SAP Africa market unit. They will be based in South Africa and report to SAP’s Global Compliance organisation. – TimesLIVE