International software giant SAP and its South African subsidiary, Systems Applications Products (SA), have agreed to pay nearly R3 billion in penalties and repayments as part of an alternative dispute resolution with the National Prosecuting Authority (NPA) and the US Department of Justice. The agreement stems from SAP’s involvement in corruption in South Africa between 2013 and 2017, including dealings with the Gupta family. The penalties include over $220 million, with a portion going directly to South Africa. OUTA, a South African civic organisation, welcomes the resolution but emphasises the need to hold individuals accountable and suggests using the recovered funds to support the NPA’s efforts in prosecuting state capture cases.
At the time the corruption was exposed, SAP reacted vigorously. It’s interesting looking back at our coverage in 2017 – click on the headlines below to access….
Corrupt SAP exposed. Gupta bribery to pull in US, German authorities.
Right of reply: SAP “strongly rejects” R100m Gupta kickback reports
Gupta probe: SAP appoints interim SA managers, reveals investigating law firm
KPMG, McKinsey feel the graft heat as Zuptoids walk the line of no consequences
No soft landings for SAP’s corporate crooks in Gupta saga – Save SA
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State capture costs software giant SAP nearly R3bn in SA
From the Organisation Undoing Tax Abuse (OUTA)
SAP’s R2.295bn penalties and repayments to South Africa show alternative dispute resolutions can help resolve state capture cases
OUTA welcomes the resolution, findings and stiff penalties in the agreement concluded by the National Prosecuting Authority (NPA) and the US authorities with international software giant SAP and its South African subsidiary, Systems Applications Products (SA), over SAP’s involvement in corruption.
“SAP’s conduct and direct involvement in corruption in South Africa was despicable and outrageous,” says Wayne Duvenage, OUTA CEO.
The agreement, made in terms of an alternative dispute resolution, was announced by the NPA (see here) and the US Department of Justice (see here).
Read more: NSFAS Chair takes leave of absence over OUTA bombshell
The corruption, between 2013 and 2017, with some negotiated through the Guptas, resulted in SAP contracts with the City of Johannesburg, the City of Tshwane, the Department of Water and Sanitation, Eskom, Transnet, SARS, Prasa and the Gauteng Department of Finance.
The US Department of Justice says SAP will pay over $220 million in penalties, for corruption in South Africa and Indonesia, with “up to $55.1 million of the criminal penalty” going to South Africa towards the South African settlement. That $220 million is worth about R4.1 billion and the $55.1 million is worth about R1.03 billion at current exchange rates.
The NPA says SAP will end up paying R2.2 billion to the South African entities in repayments, some already paid, plus R750 million in penalties. This is a total of R2.95 billion. The penalty payment goes into the government’s Criminal Assets Recovery Account. The NPA says this agreement “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”.
The agreement also requires SAP to cooperate with US and SA authorities in criminal investigations into the individuals involved in the corruption, including former SAP executives, the South African government body officials and the intermediaries.
“While the alternative dispute resolution process does help to bring these matters to a close and achieve some level of accountability, OUTA would like to see the individuals involved being held to account, including those who acted for SAP, the officials in the government bodies and the intermediaries,” says Duvenage.
“It’s all too easy for these wealthy companies to pay fines and change their processes to ensure this conduct is never repeated, but this doesn’t resolve the fact that the people who were directly involved are still walking the streets and enjoying the fruits of their ill-gotten gains. It is imperative that those involved are now rounded up, charged and imprisoned for their role in these nefarious activities.”
OUTA supports these alternative dispute resolutions as a speedier – and often more effective – means of achieving justice, particularly when they include a requirement that the company is obliged to cooperate with criminal prosecution of the individuals involved.
OUTA would like to see the R750 million which goes in the Criminal Asset Recovery Account being used to support the NPA in its efforts to prosecute state capture cases.
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