SAP to shell out $100m for African fraud settlement

Germany-based software firm, SAP, has agreed to pay a penalty of nearly $100 million to settle bribery accusations made by the US Securities and Exchange Commission (SEC).

SAP eventually conceded to a financial penalty of about $100 million for violation of the Foreign Corrupt Practices Act (FCPA) due to bribery schemes involving multiple countries including South Africa, Malawi, Kenya, Tanzania, Ghana, Indonesia, and Azerbaijan.

As per SEC’s statement, SAP committed to halt any infractions of these provisions and will have to pay the disgorgement in $85 million, together with a prejudgment interest of more than $13.4 million, totaling over $98 million. However, the penalty will be reduced by SAP’s prior payment of up to $59 million to the South African government regarding the same issue.

The SEC’s order concluded that SAP paid bribes to government officials via third-party intermediaries to secure business with public sector customers in these countries from December 2014 to January 2022. The SEC further revealed that SAP falsely recorded these bribes as legitimate business costs.

“The SEC’s order finds that SAP failed to implement sufficient internal accounting controls over the third parties and lacked sufficient entity-level controls over its wholly owned subsidiaries,” the SEC stated.

Our order holds SAP accountable for misconduct that spanned seven jurisdictions and persisted for several years and serves as a stark reminder of the need for global companies to be attuned to both the risks of their business and the need to maintain adequate entity-level controls over all their subsidiaries.

Charles E. Cain, Director, SEC’s FCPA Unit

The allegations against SAP in South Africa revolved around a number of transactions with government departments and companies, such as Eskom, Transnet, and the Department of Water and Sanitation. SAP managed to settle a few of these cases, with settlements costing millions of dollars.

Responding to the South African charges, SAP issued a statement saying, “We are glad to have reached agreements with the US Department of Justice, the SEC, and South Africa’s National Prosecuting Authority regarding historic compliance issues.”

SAP highlighted full cooperation with the authorities and emphasized that the settlements resolve all compliance investigations in the United States and South Africa. It was asserted that, those responsible had left the company more than five years ago.

“SAP’s principles or commitment to ethical behaviour are not reflected by the past actions of some former employees and partners,” the statement read, reaffirming the company’s improved internal controls and compliance program in recent years.

“SAP’s robust controls, strong remediation, and compliance enhancements were specifically pointed out by both U.S. and South African authorities,” the company further stated.