UPDATE: Software AG has responded to our open letter. Here is the company’s statement, issued to us by Software AG’s Senior Vice President for Global Corporate Communications & Marketing, Byung-Hun Park: “Thank you for your email. Please do not take silence as meaning that Software AG is not fulfilling its duty to work on the matter at hand. We have decided to review our total business in South Africa including all partner agreements, contracts and deals to ensure that we have maximum transparency regarding any allegations. We are still in the review process of all deals using both internal and external legal resources and do not want to communicate prematurely. In reviewing business activities in the light of our own strict rules and guidance and our own code of business conduct, we are making progress, but we are not done yet. You can trust us that we are working on the subject with full speed and the highest priority. We will announce the final results as soon as we have a 100 percent overview on every single business activity.”
JOHANNESBURG — Large multinationals like KPMG, SAP and McKinsey have been put under the spotlight regarding their dodgy dealings with the Guptas in South Africa. But one company that has dodged the spotlight is Software AG, a German enterprise software business that has also been accused of getting into bed with the Guptas to win cushy deals with state-owned companies. After months of silence from Software AG and several questions from BizNews readers, I decided yesterday to email the company’s Senior Vice President for Global Corporate Communications & Marketing, Byung-Hun Park, for an update. While he had responded to me previously in July (although sparingly so), this time the company has avoided my latest emails altogether, perpetuating its silence on the matter. In July, Park told BizNews that “Software AG has a compliance board that is currently gathering information and conducting interviews. Please understand that we are in the beginning of this review and therefore cannot comment further for the time being. I will keep you informed on further progress.” Months later, there’s been no update on this probe. It’s, therefore, time to put it back in the spotlight. Software AG has remained incredibly silent throughout this whole saga, leaving South Africans in the dark on what the company is doing to tackle allegations of corruption within its own ranks. Below then is my open letter to the company’s Germany-based CEO and chairman, Karl-Heinz Streibich, asking him what Software AG is doing regarding this crisis. We will be emailing this open letter to Software AG once published and we will update this story if they provide a response. – Gareth van Zyl
Dear Mr Karl-Heinz Streibich
I trust you are aware of the scandals surrounding the Guptas and allegations of corrupt kickbacks in South Africa.
New York’s Wall Street Journal summed up the situation aptly in a front page story yesterday, which you can read by clicking here. There have also been several stories on the crisis in London’s Financial Times.
Of course, this saga has roped in the likes of SAP SE, KPMG and McKinsey & Company. Meanwhile, Bell Pottinger, the UK PR firm who represented the Guptas, has gone bankrupt directly as a result of the highly unethical work they carried out for the Guptas.
All of the above-mentioned companies have been forced to respond to the allegations. KPMG has replaced its entire top management team and is losing clients on a weekly basis in South Africa. SAP has suspended four of its managers amid an internal probe, and McKinsey has a suspended a South African director regarding its relationship with the Guptas. South African civil society body, Corruption Watch, has also asked the US Department of Justice to investigate McKinsey and there are growing calls for the FBI to get involved.
But your company, Software AG, is no different to any of these above-mentioned companies as your business is also facing similar allegations in South Africa.
To recap, in July this year respected investigative journalists from amaBhungane and Scorpio reported that the Gupta email leaks show that Software AG entered into a deal with Gupta-linked Global Softech Solutions (GSS) in a bid to win an R180m contract from South African state-owned rail company Transnet.
However, GSS was little more than a front to secure revenue for the Guptas. Moreover, Software AG sales director Riaaz Jeena, who was involved with the deal, created a second sales commission agreement to benefit himself with GSS deals.
Meanwhile, Jeena’s wife Fehmeda Alibhai, has also worked for the Guptas’ Sahara Systems. Added into the mix is Lawrence Kandaswami, who is a managing director of SAP’s South African Business. Kandaswami first introduced Software AG to GSS. (Kandaswami has been suspended from his post amid a SAP probe into a similar Gupta kickback scandal – first introduced Software AG to GSS.)
You can read more about the saga by clicking here. A top South African forensic investigator, Paul O’Sullivan, has said the Gupta email leaks are real and will stand up as evidence in a court of law.
In a recent open letter to SAP chair Hasso Plattner, I also asked him for more clarity on what his company (which happens to be a direct competitor to yours) is doing about their links with the Guptas in South Africa.
Plattner responded to me timeously, within a day. I’m therefore hoping that you’ll do the same.
Mr Streibich, the reality is that this is a serious situation that your company cannot afford to ignore. I have emailed your Senior Vice President for Global Corporate Communications & Marketing, Byung-Hun Park, for an update on Wednesday, 11 October, but I have received no response. Mr Park previously told me in July that an internal probe of sorts had been launched and that he would keep me updated, but I have heard nothing further. It seems no other media in South Africa has been updated on the situation at Software AG either.
Therefore, I’m posting the email that I sent to him yesterday in this article below. I hope you can respond to this letter and the questions I have listed below.
To conclude, I understand that Germany’s anti-corruption laws specifically prohibit “facilitation payments”, and impose huge penalties on offenders. I trust then that you will take what I have written above into serious consideration and act on it with the necessary response.
Gareth van Zyl
Here is the copy of the email that I sent to Software AG’s Senior Vice President for Global Corporate Communications & Marketing, Byung-Hun Park, at 11:25 AM (South African time) on Wednesday 11 October 2017.
I trust you’re well. Software AG has gone very quiet on this matter regarding allegations of corruption concerning the Guptas. Can you please give me an update as we’d like to run a story tomorrow with what is happening with Software AG. To recap, here are the questions I had previously asked which our readers are wondering about, specifically about what’s happened to Riaad Jeena, your sales director in South Africa. Has he been suspended or is he still working at the company?:
SAP, which was also involved in a similar scandal, has suspended its South African management and flown out execs to investigate. Will Software AG do the same?
Will Software AG suspend your sales director Riaaz Jeena possibly? Has he been suspended?
Is it normal for sales directors at Software AG to create “a second sales commission agreement seemingly to ensure that he too would receive a slice of the pie” as News24 reported?
For how long has Software AG been doing business with the Guptas?
Have the South African police started investigating Software AG?
Are European or US legislators investigating Software AG amid this scandal?
Gareth van Zyl / Deputy Managing Editor