‘Transnet, Eskom did give funds to Gupta entities’

Signs of mismanagement, irregularities – report

TRANSNET and Eskom did make payments to Guptalinked entities‚ and there were indications of mismanagement and irregularities – but there were not payments to government officials or state-owned enterprises (SOEs).

This is part of the outcome of global software company SAP’s investigation into contracts with the two SOEs, released yesterday.

The mismanagement was in relation to the management of the Guptalinked third parties and the irregularities were in the adherence to SAP’s compliance processes‚ the company’s president of global customer operations Europe‚ the Middle East and Africa‚ Middle and Eastern Europe and greater China‚ Adaire Fox Martin‚ said yesterday

“There is no evidence‚ however‚ of any payment or attempted payment made to any South African government official or any employee of an SOE in connection with Transnet and Eskom‚” she said.

SAP has been embroiled in the Gupta scandal‚ with other companies‚ such as consulting firm McKinsey and Trillian Capital Partners‚ which were all linked to Eskom contracts.

An internal investigation into these matters was conducted by law firm Baker McKenzie on behalf of SAP.

A tranche of leaked Gupta e-mails showed not only how kickbacks were allegedly paid, but also how the Guptas gained access to highly confidential draft contracts between SAP and Eskom.

The SAP-Eskom contract was for an SAP management tool that tracks purchasing‚ invoicing and payment documents.

The Guptas also managed to obtain a bid by SAP to provide commercial software for use in the South African public service.

There were also allegations that CAD House‚ which is owned by former president Jacob Zuma’s son Duduzane‚ received multimillion-rand kickbacks for helping SAP secure contracts with Transnet.

Going through a summary of the report‚ Fox Martin said SAP South Africa had concluded two contracts with Transnet and four with Eskom between December 2014 and June last year‚ with GSS and CAD House acting as commissioned intermediaries.

One of the contracts involved “a commission” of 10% while the other five contracts involved a commission rate of 14.9%”.

This was just below the 15% threshold which would have triggered an SAP executive board review of the deals‚ Fox Martin said.

She said the investigation had also found no evidence that SAP had direct contact with any member of the Gupta family or Zuma family.

“The primary connection was with Gupta intermediary Santosh Choubey and the people who reported to him.

“Choubey became the principal for Global Software Solutions (GSS) and CAD House‚” Fox-Martin said.

GSS became eligible to act as a sales commission agent in September 2014 when it became a value-added reseller‚ and CAD House was approved as a sales commission agent in August 2015.

SAP terminated the ability of valueadded resellers such as GSS to act as sales commission agents in 2016.

Fox-Martin said SAP would not tolerate misconduct and wrongdoing and had instituted disciplinary proceedings against three senior executives‚ who were put on administrative leave in July last year and then suspended in October.

She said these executives had now resigned and had received no severance from SAP.

SAP refused to divulge who the officials were.

‘ The primary connection was with Gupta [agent] Santosh Choubey