JOHANNESBURG — The tumbling #GuptaLeaks dominos have started to gather irresistible momentum. With South African law enforcers conspicuous by their silence, claiming they need the hard drives to act, the retributive focus has now swung into the global arena. Disclosures around McKinsey’s “endorsement by omission” of Gupta-driven corruption will have got US Justice Department alarm bells ringing. But an even bigger fish has broken cover. The corrupted network of patronage is suddenly in the crosshairs of zero-tolerance German officials and the US’s Securities Exchange Commission. This follows disclosures of how German software multinational SAP paid off the Guptas to secure a massive contract at Transnet. SAP’s founder Hasso Plattner has close SA links, including the ownership of the Fancourt golf resort in the Southern Cape. The SAP scheme is a repeat of the Homix play which was exposed by the SA courts. That one cost Neotel’s CEO and FD their jobs over an identical Transnet deal: to land the contract 10% of its value needed to be injected into a Gupta front company as a “facilitation” fee. The Indian Government appears to have turned a blind eye to Neotel’s dalliances. Its US and German equivalents, however, take a very different approach to corruption by their corporate citizens. Gradually, then suddenly. – Alec Hogg
By Staff Writer
One of the world’s biggest business software companies SAP may find itself in hot water with German and US regulators after being embroiled in a massive Gupta kickback deal.
Investigative journalism unit, AmaBhungane, released a bombshell report on Tuesday that details how SAP, in August 2015, agreed to pay a 10% “sales commission” to a Gupta company in return for Transnet deals.
Apart from the commission of 10% being above the industry norm of 2-3%, the Gupta controlled company — CAD House — obscurely also specialises in 3D printing.
Gupta email leaks reveal that if CAD House was the “effective cause” of SAP landing a Transnet contract worth R100-million or more, it would get 10%, reported AmaBhungane.
In true Gupta style, CAD House seemingly helped secure SAP a mega Transnet deal, as AmaBhungane identified that R99.9m in SAP payments flowed to the Gupta-linked company.
Also in true Gupta style, most of the money didn’t stay with CAD House as millions of rands were transferred to the likes of Sahara Computers. Only R5.7-million did not flow straight out.
CAD House is half owned by Santosh Choubey, who AmaBhungane describes as “a key Gupta lieutenant employed by their Sahara Systems”.
“Minutes and other #GuptaLeaks records show, however, that CAD House was managed as a subsidiary of the Sahara group,” reports AmaBhungane.
SAP denies wrongdoing
When asked for comment on this latest #GuptaLeaks revelation, SAP’s South Africa arm displayed a nonchalant response and further denied any wrongdoing.
“What the partner does with their money I have no control over. If you say these guys pass the money up the line, I have no control over that, I have no visibility over that,” SAP South Africa chief financial officer, Deena Pillay, told AmaBhungane.
SAP South Africa further said that a “reputable” third party company vetted the CAD House deal and found no “red flags”. This despite revelations in late 2015 about telecoms firm Neotel having agreed, controversially, to pay Gupta-linked letterbox company Homix R104m to land Transnet contracts. Neotel’s CEO and CFO subsequently resigned amid the scandal.
What is even more bizarre is SAP South Africa’s answer on why it needed CAD House’s obscure links to 3D printing to help it win contracts with state-owned rail company Transnet.
“We were doing a proof of concept and CAD House was an existing vendor at Transnet and we were looking at doing 3D models for these guys to show them the value and the benefit of using our solution,” Pillay is quoted as saying.
“[The deal] was about Transnet in terms of the rail infrastructure, the way the operations work, the yards, the trains – all of that these guys were able to do the necessary 3D modelling as well as being able to position the SAP solution,” she said.
Transnet, meanwhile, has denied knowledge of any deal with CAD House.
But seeing as SAP is a listed company in both Germany and the US, the implications could be massive as they could spark anti-corruption investigations that could bring down a number of key players.
Already, SAP is also on the United States Securities and Exchange Commission’s (SEC) radar following a bribery scandal in Panama.
Last year, SAP paid a $3.9m fine to the SEC after a senior SAP official was found to have paid bribes for state business in Panama via a local partner.