- The SAP FCPA violation will result in a $100 million fine from the US Securities and Exchange Commission.
- From December 2014 to January 2022, SAP was found to have utilized third-party intermediaries and consultants to pay bribes to government officials in order to secure business.
- The SEC’s action is part of a coordinated global settlement that involves the United States Department of Justice and criminal and civil authorities in South Africa.
German software giant SAP has disclosed that it paid Kenyan government officials for tenders in the country. The company has now agreed to pay $100 million in fines to settle charges of paying bribes to secure business deals in Kenya, Tanzania, South Africa, Malawi, Ghana, Indonesia, and Azerbaijan.
In 2019, a whistleblower complaint filed with the US Securities and Exchange Commission and the US Department of Justice indicated that SAP was involved in corruption and bribery, thereby violating US securities laws, including the Foreign Corrupt Practices Act.
The Securities and Exchange Commission, in a statement, announced that SAP has agreed to monetary sanctions of nearly US$100 million in disgorgement and prejudgment interest to settle the SEC’s charges.
SAP FCPA violation
From at least December 2014 to January 2022, SAP was found to have employed third-party intermediaries and consultants to pay bribes to government officials to obtain business with public sector customers in the seven countries.
During the period under review, the German firm undertook contracts with entities such as Rural Electrification and Renewable Energy Corporation (REREC), Bamburi Cement, New KCC, Kenya Power and Lighting Company, Mumias Sugar, Bidco Oil Refineries, Mukwano Industries, Kakira Sugar, and Diamond Trust Bank, among other leading corporates.
Read also: Tanzania’s local authorities a hotbed of corruption; Audit
‘Cooking’ of accounting books
The SEC’s order states that SAP, whose American Depositary Shares are listed on the New York Stock Exchange, violated the FCPA by employing third-party intermediaries and consultants from at least December 2014 through January 2022 to pay bribes to government officials and obtain business with public sector customers in the seven countries mentioned above.
According to the SEC’s order, SAP inaccurately recorded the bribes as legitimate business expenses in its books and records. However, some of the third-party intermediaries could not demonstrate that they provided the services for which they had been contracted.
The SEC’s order finds that SAP failed to implement sufficient internal accounting controls over the third parties and lacked adequate entity-level controls over wholly-owned subsidiaries.
In 2016, the SEC charged SAP with violations related to books and records and internal accounting controls concerning a bribery scheme in Panama.
SAP consented to the SEC’s order, acknowledging that it violated the anti-bribery, record-keeping, and internal accounting controls provisions of the Securities Exchange Act of 1934.
SAP agreed to refrain from committing or causing any violations of these provisions and to pay disgorgement of $85 million plus prejudgment interest of more than $13.4 million, totaling more than $98 million.
This amount will be offset by up to $59 million paid by SAP to the South African government in connection with its parallel investigations into the same conduct.
The SEC’s action is part of a coordinated global settlement that includes the US’ Department of Justice (DOJ) and criminal and civil authorities in South Africa.
In its parallel case, SAP agreed to pay the DOJ a $118.8 million criminal fine and a forfeiture of approximately $103 million, of which $85 million will be satisfied by the company’s payment of disgorgement according to the SEC’s order.
The SEC’s investigation was conducted by Sana Muttalib and Sonali Singh and was supervised by Ansu N. Banerjee of the SEC’s FCPA unit.
