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SAP to pay $100m in Africa fraud settlement

By , Africa editor
Africa , 11 Jan 2024
SAP agrees to monetary sanctions of nearly $100 million to settle bribery charges.
SAP agrees to monetary sanctions of nearly $100 million to settle bribery charges.

SAP, a German software company, has agreed to pay $100 million penalty to settle US Securities and Exchange Commission (SEC) bribery claims.

SAP was charged by the SEC, yesterday, with violating the Foreign Corrupt Practices Act (FCPA) "arising out of bribery schemes in South Africa, Malawi, Kenya, Tanzania, Ghana, Indonesia, and Azerbaijan".

SAP agreed to a financial penalty of almost $100 million in "disgorgement and prejudgment interest" to settle the SEC accusations.

According to the SEC, the company agreed to cease and desist from committing or causing any violations of these provisions and "to pay disgorgement of $85 million plus prejudgment interest of more than $13.4 million, totalling more than $98 million, which will be offset by up to $59 million paid by SAP to the South African government in connection with its parallel investigations into the same conduct."

The SEC says it regulates securities exchanges, brokers and dealers, investment advisors, and mutual funds in order to promote fair dealing, provide important market information, and prevent fraud.

In a press release issued yesterday, it said: "The SEC's order finds that SAP, whose American Depositary Shares are listed on the New York Stock Exchange, violated the FCPA by employing third-party intermediaries and consultants from at least December 2014 through January 2022 to pay bribes to government officials to obtain business with public sector customers in the seven countries mentioned above."

According to the SEC's ruling, SAP misreported the bribes as legitimate business expenses in its books and records, despite the fact that some of the third-party intermediaries were unable to demonstrate that they supplied the services for which they were engaged.

"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," said Charles E. Cain, director of the SEC’s FCPA Unit.

In South Africa, the charges against SAP stemmed from a small number of transactions the business made with government departments and companies, including Eskom, Transnet, and the Department of Water and Sanitation.

In South Africa the company settled some of the cases, paying multimillion dollar settlement costs.

In response to the South African cases, SAP responded yesterday in a statement, which reads: "We are pleased that SAP has reached agreements with the US Department of Justice, the SEC, and South Africa's National Prosecuting Authority regarding historic compliance issues.

"SAP fully cooperated with the authorities, and these settlements resolve all compliance issues under investigation in the United States and South Africa.

"The corporation parted from all responsible parties over five years ago. The past behaviour of some former colleagues and partners does not reflect SAP's principles or commitment to ethical behaviour."

In conclusion, SAP stated that it had significantly improved its compliance programme and internal controls in recent years.

"Indeed, both the U.S. and South African authorities specifically highlighted SAP's strong remediation, robust controls, and compliance enhancements," SAP noted in a statement.

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