SAP to pay R4.1bn in state capture fines

German-based software company SAP has been fined more than R4 billion to resolve investigations by the U.S. Justice Department and the Securities and Exchange Commission (SEC) into bribery and corruption in South Africa and Indonesia.

This was announced on Thursday by the US Attorney’s Eastern District of Virginia office.

The company was ordered to pay a criminal penalty of $118.8 million (R2.2 billion) and administrative forfeiture of $103,396,765 10 (R1.9 billion).

Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division said SAP paid bribes to officials at state-owned enterprises in South Africa and Indonesia to obtain valuable government business.

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“SAP will also continue cooperating with the department in any ongoing or future criminal investigation arising during the term of a deferred prosecution agreement,” it said.

Improper advantage’

According to court documents, SAP and its co-conspirators made bribe payments and provided other things of value intended for the benefit of South African and Indonesian foreign officials, delivering money in the form of cash payments, political contributions, and wire and other electronic transfers, along with luxury goods purchased during shopping trips.

“Specifically, concerning South Africa, between approximately 2013 and 2017, SAP, through certain of its agents, engaged in a scheme to bribe South African officials and to falsify SAP’s books, records, and accounts, all with the goal of obtaining improper advantages for SAP in connection with various contracts with South African departments, agencies, and instrumentalities, including the City of Johannesburg, the City of Tshwane, the Department of Water and Sanitation (a South African state-owned and state-controlled custodian of water services), and Eskom Holdings Limited (a South African state-owned and state-controlled energy company)”.

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Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division said SAP has accepted responsibility for corrupt practices that hurt honest businesses engaging in global commerce.

“We will continue to vigorously prosecute bribery cases to protect domestic companies that follow the law while participating in the international marketplace,” she said.

The department’s resolution is coordinated with the National Prosecution Authority in South Africa and SEC.

According to court documents, SAP entered into a three-year deferred prosecution agreement (DPA) with the department in connection with a criminal information filed in the Eastern District of Virginia charging the company with two counts: conspiracy to violate the anti-bribery and books and records provisions of the FCPA relating to its scheme to pay bribes to South African officials.

The other charge relates to conspiracy to violate the anti-bribery provision of the FCPA for its scheme to pay bribes to Indonesian officials.

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SAP paid bribes to officials at state-owned enterprises in South Africa and Indonesia to obtain valuable government business.

The cost of State Capture

On 11 September 2017, former Finance Minister Pravin Gordhan estimated the cost of state capture at 250 billion rand (almost $17 billion USD), in a presentation at the University of Cape Town Graduate School of Business.