German software company SAP finalised its investigation into contracts with Eskom and Transnet and on the 8th of March 2018, admitted to making payments to Gupta-linked companies.
Adaire Fox-Martin, member of the Executive Board of SAP said the investigation uncovered irregularities in its compliance processes.
“We have eliminated sales commission on public sector deals in countries with a corruption perception index, according to the international group Transparency International, of below 50.”
Soon after the media briefing, SABC news obtained documents on the sales commission agreement.
A document called “Deal Approval” was signed off by local, regional and international executives, including a SAP board member.
According to the whistleblower, the appendix of the Sales Commission Agreement is loaded onto the deal agreement as an attachment for all approvers to see the Partner and the Commission being paid.
Only South African executives faced disciplinary action while regional and international executives did not face any punitive measures.
Emails and documents obtained by the SABC indicate that the global compliance team signed off on the commission arrangements and in one case that the head of global compliance was made aware that they couldn’t rule out the possibility of the Gupta family acting in the background.
SAP responded to the SABC by saying that their global compliance team was unaware of any Gupta links after the companies changed ownership and therefore, continued the commission relationship, although it was later revealed that those companies indeed had Gupta links.
The German software company no longer pays commissions on public sector contracts in South Africa.
In a recording of a staff meeting obtained by the SABC, SAP executives in Germany denied to staff in South Africa that the board knew of the deals.
Insiders claim that the South African executives resigned in March following hefty legal bills as SAP frustrated them with endless postponements of their disciplinary hearings until they eventually gave up.
As SAP raises capital from the New York Stock Exchange, it has to abide by the stringent US controls and international best practice.
When investigative journalists Amabhungane uncovered their dealings with the Gupta’s, the company quickly reported itself to the United States Department of Justice to avoid a multi-million dollar fine.
But SAP hasn’t learned a lesson. It continues with ‘sales agreement practice’ in other territories, despite the Organisation for Economic Co-operation and Development or OECD frowning upon the practice.
International Chamber Of Commerce’s Mark Novitz says, “I would be very surprised if SAP contended that they were not familiar with the United Nation Convention, that they were not familiar with the legislation in Germany or in this instance, legislation in South Africa.”
“South Africa, besides being obliged to adhere to principles and the requirements of various international conventions, one can’t lose sight of the fact that South Africa has its own fairly stringent anti-corruption legislations.”
“And if one looks at the international conventions and our own legislation, there has been a trend across the world particularly in the 21st century to align national legislation with international conventions.”
In 2017 SAP, was fined 3.9 million US dollars by US securities regulators for failing to prevent a bribery scheme by a sales executive who won lucrative contracts from the Panama government.
When a company reports itself to the Securities Exchange Commission like it did in the case of South Africa, the likelihood is that the consequences may be lighter than if it was found out.
Advocate Novitz says if the evidence is compelling then the National Director of Public Prosecutions must deal with it.
Mark Novitz says, “I don’t think that because they paid an admission of guilt fine to the SCC in Panama that it should be taken as a given that they are at fault here.”
“But if the evidence that emerges, if the evidence that is available reflects that there has been any wrong doing on the part of SAP in relation to a situation in South Africa, then of course if we look at our South African legislation; our 2004 Act; and the ancillary legislation here… there is more than enough for the National Director of Public Prosecutions to deal with it.”
SAP says it will no longer pay sales commissions on public sector deals in countries, like South Africa, that rank 50 and below in global corruption indices.
Botswana, Rwanda and Namibia rank above 50 on the Transparency International Corruption Index.
This means SAP can continue the commission practice in these countries.
Only after the Gupta Leaks exposed the practice, did SAP beef up its African compliance units.
The US Department of Justice and the Securities and Exchange Commissions have declined to comment on progress with their investigations and the likely outcomes. It will only be the investigations which will determine the actual wrong committed and who takes the full responsibility for such wrongdoing.
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