SAP to pay R4.1 billion to resolve investigation into bribery in South Africa

SAP has agreed to pay $220 million (R4.1 billion) to resolve investigations by the U.S. Justice Department and the Securities and Exchange Commission (SEC) into alleged bribes paid in South Africa and Indonesia.

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

SAP SE is a publicly traded global software company based in Germany. It stood accused of violating the U.S. Foreign Corrupt Practices Act (FCPA).

In a statement released Wednesday night, the U.S. Department of Justice said the deal was coordinated with prosecutorial authorities in South Africa and the SEC.

The allegations against SAP date back to South Africa’s state capture era, where former President Jacob Zuma and his administration were found to be in bed with the Gupta business empire.

In 2017, SAP confirmed that an internal probe into its South African operation found instances of misconduct related to businesses connected to the Gupta family.

“SAP has accepted responsibility for corrupt practices that hurt honest businesses engaging in global commerce,” said U.S. Attorney Jessica Aber for the Eastern District of Virginia.

“We will continue to vigorously prosecute bribery cases to protect domestic companies that follow the law while participating in the international marketplace.”

Argentieri said the SAP deal was the second coordinated resolution with South African authorities in just over a year.

“[This] marks an important moment in our ongoing fight against foreign bribery and corruption,” she said.

“We look forward to continuing to strengthen our relationship with South African authorities and others around the world.”

SAP entered into a three-year deferred prosecution agreement with the department concerning criminal information filed in the Eastern District of Virginia.

The company faced two counts:

1. 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
2. Conspiracy to violate the anti-bribery provision of the FCPA for its scheme to pay bribes to Indonesian officials

According to court documents, SAP and its co-conspirators made bribe payments and provided other things of value intended to benefit South African and Indonesian foreign officials.

This included delivering money in the form of cash payments, political contributions, and wire and other electronic transfers, along with luxury goods purchased during shopping trips.

In South Africa, through certain of its agents, SAP engaged in a scheme to bribe South African officials and to falsify its books, records, and accounts to obtain improper advantages for the company in connection with various government contracts.

These included tenders with South African departments, agencies, and municipalities, including the City of Johannesburg, the City of Tshwane, the Department of Water and Sanitation, and Eskom.

The allegations cover the period between 2013 and 2017.

Under the terms of the deal, SAP will pay a criminal penalty of $118.8 million (R2.2 billion) and administrative forfeiture of $103,396,765 (R1.9 billion).

SAP will continue cooperating with the department in any ongoing or future criminal investigation arising during the term of the prosecution agreement.

The U.S. Justice Department will credit up to $55.1 million (R1 billion) of the criminal penalty against amounts that SAP pays to resolve an investigation by law enforcement authorities in South Africa for related conduct.

In addition, the department will credit up to the full $103-million forfeiture amount against disgorgement that SAP pays to the SEC or South African authorities.

The department noted that SAP received credit for cooperating with its investigation, which included immediately stepping up after South African investigative reports made public allegations of the misconduct in 2017.

SAP in South Africa did not immediately respond to a request for comment.