Johannesburg – Global software company SAP, which admits to the criminal actions of its former executives and managers who paid millions of rand to irregularly secure contracts in South Africa, has agreed to pay over R2 billion in restitution and punitive reparations.
SAP South Africa entered into tainted contracts with Transnet, Eskom, SA Revenue Service (SARS), PRASA, the Department of Water and Sanitation, and the Gauteng Department of Finance, among others.
Several of these tainted contracts were intermediated by the Gupta family companies CAD House (Pty) Ltd, Global Softech Solutions (Pty) Ltd, and Lejara Global Solutions (Pty) Ltd to whom SAP paid aggregate amounts of more than R100 million to secure contracts at Transnet, Eskom, and SARS.
SAP has since agreed to settle the matter through a Corporate Alternative Dispute Resolution.
Announcing the settlement, the National Prosecuting Authority (NPA) on Thursday said it “concluded a landmark Corporate Alternative Dispute Resolution” with SAP Global, and its South African subsidiary, Systems Applications Products (South Africa) (Pty) Ltd.
The NPA said the resolution follows SAP’s voluntary self-reporting which triggered investigations and legal action taken by the United States Department of Justice (US DOJ) and the United States Securities and Exchange Commission (US SEC).
Through international cooperation between the NPA and the US DOJ, the Resolution was coordinated with US criminal justice processes that resulted in a settlement agreement confirmed on Wednesday, by a US Federal Court.
In terms of the resolution, SAP Global agreed to repay R2.2 billion – made up of several amounts siphoned from state-owned entities including Eskom, Transnet, the cities of Johannesburg and Tshwane, as well as the Gauteng Department of Finance, SARS, and Prasa.
The NPA said SAP has already repaid the Department of Water and Sanitation under agreements concluded with the SIU.
“Over and above these restitution payments, SAP will pay an amount of R750 million into South Africa’s Criminal Assets Recovery Account as punitive reparation payments, in recognition of the social and economic harm caused by its conduct in South Africa,” the NPA said.
“This R750 million punitive payment will be credited against a total fine of $118.8 million (R2.218 billion at current exchange rates) to be paid by SAP in the US under the co-ordinated US Resolution.”
In addition to monetary reparations, SAP South Africa and SAP Global have committed themselves to fully cooperating with the South African authorities in their criminal investigations into former executives and employees, and their intermediaries.
SAP has already conducted thorough investigations into the corruption involving its South African executives and shared its findings with the NPA.
The NPA’s Asset Forfeiture Unit (AFU) has played a key role in facilitating the finalization of the resolution.
AFU head, and deputy national director of public prosecutions, Advocate Ouma Rabaji-Rasethaba, has welcomed the resolution, saying: “The resolution is a bold new step that takes South Africa forward in fighting crime.
“The NPA is committed not only to prosecuting criminals but also contributing to the economic recovery of the country through restitution of the proceeds of crime…”
The resolution obliges SAP to return all benefits that it received from corrupt contracts that it concluded.
It also subjects SAP to punitive reparation payments that far exceed any fine that the South African courts have ever imposed on a company as a criminal sentence.
In addition to the repayment, disclosure, and cooperation provisions, the resolution obliges SAP to commit to a local and international corporate compliance programme to prevent future corrupt practices.
The NPA has already reviewed and approved SAP’s corporate compliance programme, the implementation of which will be monitored going forward.
Based on the enhancements that SAP has put in place since the time the misconduct was detected and reported, the NPA said it views the program as a “model for corporate compliance practices going forward”.
These enhancements include the adoption of risk-based controls and data analytics, increasing headcount and investing more resources in compliance, and foregrounding compliance in internal training, messaging, and company policies.
To ensure fulfillment of these commitments, the resolution permits the NPA to reopen its investigation should the company fail to implement the programme, fail to provide the necessary cooperation with the ongoing South African investigation, or if it provides materially false, incomplete, or misleading information.
SAP Global is a leading company in business software, with a presence in more than 130 countries, which began operating in South Africa in 1982.
South Africa joins a growing list of countries that employ alternative dispute resolution mechanisms to combat foreign bribery and corruption.
These include the United States, United Kingdom, Germany, France, Kenya, Malaysia, Singapore, Mexico and Canada.
The NPA said these mechanisms are considered a vital instrument in combating corruption and are recommended by the United Nations Convention Against Corruption, and endorsed by the Organisation for Economic Development.
SAP has already proactively reported information about the corrupt deals to the US DOJ and the NPA.
Information, including names of individuals, and businesses, details of payment transactions, and texts and emails evidencing criminal intent have already been made available by SAP to the NPA.
