AGE OF ACCOUNTABILITY
Golf, luxury and cash — SA govt bribery details emerge as US fines German ‘Gupta-linked’ SAP R4bn
SA’s State Capture ‘poster children’ — Transnet, Eskom and SARS — have again cropped up in a massive government bribery scandal involving SAP, a German-based software company, which now has to pay the US a fine of more than R4bn.
SAP South Africa, a subsidiary of German software multinational SAP, paid bribes to obtain a December 2015 City of Johannesburg contract for a licence consolidation.
A few months later, in August 2016 and as part of the same deal, a SAP South African executive ordered a purported business development partner to make an “improper” R2.2-million to an entity’s account.
This despite it being known that the entity was involved in corrupt activities.
New York trips, golf and meals
“Chat messages between the SAP South Africa local account executive and a City of Johannesburg employee corroborate that the local account executive directed, and the business partner made, the improper payment.
“In addition to these cash payments, SAP South Africa paid for trips to New York for government officials in May and September 2015, including the officials’ meals and golf outings on the trips.”
These and other details are contained in a US Securities and Exchange Commission findings document that was released on Wednesday, 10 January 2024.
It said that between December 2014 and 2018 — which, barring a few months in 2018, coincided with the second half of Jacob Zuma’s presidency — SAP used third-party intermediaries and consultants to make improper payments to government officials to get and retain business in South Africa, as well as other countries including Malawi, Kenya, Tanzania, Ghana and Indonesia.
While the document does not state it, media reports have before emerged, including via the #GuptaLeaks, that SAP had dealings in South Africa with a company controlled by members of the Gupta family, associates of Zuma’s who are now wanted for State Capture crimes in South Africa.
The National Prosecuting Authority on Thursday, 11 January, also confirmed Gupta involvement.
Read more in Daily Maverick: amaBhungane & Scorpio #GuptaLeaks: Software giant SAP paid Gupta front R100-million “kickbacks” for state business
On Wednesday, the same day as the Securities and Exchange Commission findings document was released, the US announced a major development in the scandal.
R4-billion fine
It said that SAP agreed to pay $220-million — more than R4-billion — “to resolve investigations” conducted by its Justice Department and the Securities and Exchange Commission into violations of the US’s Foreign Corrupt Practices Act.
“SAP’s resolution with the department stems from schemes to pay bribes to government officials in South Africa and Indonesia,” the US’s Office of Public Affairs said in a statement.
“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.”
The US Office of Public Affairs added that it had worked with South Africa’s NPA.
Tainted contracts and the Guptas
On Thursday, 11 January, the NPA issued a statement saying SAP effectively blew the whistle on itself and that “SAP South Africa entered into tainted contracts with Transnet, Eskom, SARS, Prasa, the
Department of Water and Sanitation (DWS) and the Gauteng Department of Finance, among others”.
The statement continued: “Several of these tainted contracts were intermediated by the Gupta family companies CAD House (Pty) Ltd, Global Softech Solutions (Pty) Ltd and Lejara Global Solutions (Pty) Ltd to whom SAP paid aggregate amounts of more than R100-million to secure contracts at Transnet, Eskom and SARS.”
It said the NPA was coordinating parallel action via the Special Investigating Unit (SIU).
Payback and criminal investigations
Money SAP was paying authorities would also be channelled to South Africa.
“SAP will pay an amount of R750-million into South Africa’s Criminal Assets Recovery Account as punitive reparation payments, in recognition of the social and economic harm caused by its conduct in South Africa,” the NPA statement said.
“In addition to these commitments to monetary reparation, SAP South Africa and SAP Global have committed themselves to provide full co-operation to the South African authorities to assist their criminal investigations into the former SAP executives and employees, their intermediaries, and the public officials whose corrupt conduct was responsible for the tainted contracts between SAP and organs of state.
“SAP has already conducted its own thorough investigations into the corruption involving its South African executives and shared the fruits of that investigation with the NPA.”
The US’s Acting Assistant Attorney General Nicole Argentieri on Wednesday said it looked forward to strengthening ties with South Africa.
“SAP paid bribes to officials at state-owned enterprises in South Africa and Indonesia to obtain valuable government business,” she said.
“This case demonstrates not only the critical importance of coordinated international efforts to combat corruption, but also how our corporate enforcement policies incentivise companies to be good corporate citizens.”
The US Securities and Exchange Commission findings document detailed some of the bribery that involved South Africa.
It said that SAP South Africa had retained several third-party consultants in the country “to offer or pay bribes to government officials or intermediaries in order to obtain contracts with public sector customers”.
The findings further stated: “SAP South Africa recorded the payments as legitimate business expenses in SAP’s books and records, despite the fact that certain intermediaries could not show that they provided the services for which they had been contracted.”
Transnet and the ‘corrupt company’
The findings referred to Transnet.
It said in December 2014, SAP South Africa closed a $4.4-million (more than R82-million) deal with Transnet, via an intermediary third party, identified simply as SA Intermediary 1, who apparently acted as a business development partner.
“SA Intermediary 1 is a South African tech company, known for various corrupt business activities, and is controlled by a South African-based family,” the findings said, without identifying any individuals.
According to the Transnet deal, SA Intermediary 1 was set to receive a 10% commission and was to perform certain duties.
Read more in Daily Maverick: State Capture Central: How Transnet became the hub of the Gupta looting frenzy
But the US findings stated: “In reality, it did not perform any actual work for SAP. There is no record of SA Intermediary 1 ever being present at meetings with Transnet, nor does SA Intermediary 1 appear to have a credible IT background or experience.
“Furthermore, bank records indicate that shortly after the deal closed, SA Intermediary 1 paid $562,215, characterised as ‘loans,’ to an individual known to be involved in making bribe payments.”
‘No tangible services’
SAP South Africa had used another intermediary, which was controlled by the same South African-based family that handled SA Intermediary 1, to help it secure another $6.58-million Transnet contract.
The South African-based family, “known as a conduit for bribing government officials,” was not named in the findings but was directly linked to SA Intermediary 2.
“SAP South Africa paid approximately $1-million in commission fees to SA Intermediary 2, a South African 3D printing firm despite the fact that it provided no tangible services to SAP. SAP South Africa and its employees knew about the red flags relating to SA Intermediary 2’s ownership.”
This aspect of the US findings appears to be what Susan Comrie, for amaBhungane, reported on in June 2018, suggesting SA Intermediary 2 could be the Guptas, or the 3D printing firm linked to them.
Read more in Daily Maverick: What global software giant SAP really knew about the Guptas
At the time in 2018, she wrote about purported “commissions” SAP paid “to Cad House, a small Gupta-controlled company in Centurion that sold 3D printers.”
Comrie also reported that SAP “had paid roughly R100-million in ‘commissions’ (that looked like kickbacks) to a Gupta-linked company in order to secure contracts from Transnet and Eskom.”
Eskom, millions, and zero work
As for Eskom, according to the US findings released on Wednesday, SAP closed a $28.58-million deal with it in November 2016 to renew software licences.
“Internally, SAP South Africa set aside several million dollars from this renewal fee to pay SA Intermediary 3, a purported IT consultant on the Eskom project. SA Intermediary 3, however, never performed any services,” it said.
Read more in Daily Maverick: Eskom: Zuma, Molefe, Koko and Singh branded key players in State Capture
The Guptas may also feature in these Eskom dealings.
According to the US findings, “SAP also retained SA Intermediary 2 to perform vague services on Eskom contracts dated March 2016 and November 2016 that, as a 3D printing company, SA Intermediary 2 was unqualified to perform.”
SA Intermediary 2 was still paid “a total of $5.18 million in consulting fees.”
In between the Transnet and Eskom dealings, the South African Revenue Service (SARS) was also in SAP’s sight.
The US findings said that SAP South Africa again used SA Intermediary 2 for this — a June 2016 contract with SARS.
It did not go into further details on the SARS deal.
Business as usual
On Thursday in response to a Daily Maverick query, SAP said it had cooperated with authorities.
“The company separated from all responsible parties more than five years ago,” it said.
“SAP has made significant enhancements to our compliance program and internal controls over the past few years. Indeed, both the US and South African authorities specifically highlighted SAP’s strong remediation, robust controls, and compliance enhancements.”
Meanwhile, on 8 January, two days before the US announced that SAP was set to pay the R4-billion fine, the company announced it appointed a manager, Emmanuel Raptopoulos, as president to oversee a newly created region, that included Africa.
Raptopoulos, in a statement, said: “Our customers have high expectations. They rely on SAP to run their most critical business processes, to digitally transform, to boost their sustainability, and to future-proof their organisations…
“[This region’s] next chapter will be fueled by accelerated cloud and AI innovation, underpinned by our purpose, our people, and our partnerships.”
No mention was made of the R4-billion fine or what the US has labelled SAP’s “bribe payments” to government officials in South Africa. DM
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Of course no one will go to jail in S.A. There may be arrests, court appearances, bail, etc., accompanied by conspiracy theories and political intrigue, all the usual, but then nothing happens.
Because there will be no minutes of meetings, no witnesses, everything will be kept deliberately vague, and the cost of taking a big multi-national to court will be prohibitive – if you judge that you have a reasonable chance of winning the case.
So SAP will agree to pay X million, with no verdict against them, and as long as they made X+1 million out of the goings on they won’t mind.
I’d be surprised if there was even one arrest. I’d even be surprised if SAP fires even one executive. Remember the Siemens scandal? Who suffered any consequences of that?
“SAP South Africa entered into tainted contracts with Transnet, Eskom, SARS, Prasa, the Department of Water and Sanitation (DWS) and the Gauteng Department of Finance, among others”.
That sounds like a comprehensive laundry list. Being a ‘deployed cadre’ seems to be a lucrative gig if you can get it.
Names? Anyone?
Check the Dubai phone book…
Phone their head office in Germany. : +49 (0)6227 / 7-47474
At the time the head office most likely did not know about it.
Zuma, Molefe, Singh, Koko……for Eskom. Zuma, Moyane for SARS . Singh, Molefe for Transnet. Among others mentioned in Amabungane/ Daily Maverick findings .
The Dubai members we know. Who are the SA government officials? That will again be another endless investigation game and in the end nobody will be convicted. What has happened with lifestyle audits or is that only applicable to the normal tax paying plebs of the country?
SAP, McKinsey, Bain, KPMG, who am I missing in this list of ‘blue chip’ global companies who conspired with the Guptas and the ANC to wreck South Africa. Yet I don’t see any outrage against them? They’re not victims or innocent bystanders but active participants in what amounts to treason. Make them sweat and sing and bring the whole bloody lot down.
There’s a lot more. You forgot Bell Pottinger. South China Rail. Thales. BAE Systems.
But also remember that for a bribe to be concluded, there has to be someone who offers a bribe and someone who accepts it. Like Shabir Sheik and Jacob Zuma. So we need the names of all the cadres who accepted money, favours and things.
All guilty of corruption against the people of SA. Treason.
Absolutely – agreed its treason and that there are always two parties to corruption (at a bare minimum!), but so many posters here only focus on the government side of it, when – as you’ve pointed out – there are plenty of big corporates involved, who should face the same sanction as the cadres. What’s good for the goose…
Hitachi
Goldfields
General Electric
Bank of Baroda. Liebherr
Let’s start with the 97 ANC bigwigs, named elsewhere.
I do have some sympathy. If you wanted to do business in South Africa or, more likely, continue to do business, you HAD to oil the ANC wheels. Truly, in many cases, caught between a rock & the ANC. If they didn’t pay the ’emolument’, someone else most definitely would. It’s crystal clear in De Ruyter’s book.
We tend to only focus on government when complaining about corruption… Suits all the big corporates who are the willing partners in these corrupt tangos. Hold BOTH to account!
Agreed! SAP has still been doing business in SA since it was exposed years ago. Even the City of Cape Town is still beholden to them!
Spot on Erika! The bias on this thread is embarrassing.
We pay the bastard government handsomely not to steal our money and it’s their job to prosecute the scum with whom they are in corrupt relationships. I fail to see where you pick up bias.
Bias in that there is only a call (on most of the posts) for cadre heads to roll – of course they should, but so should the calls for ‘the scum’ as you very aptly put it in the private sector. Yet all there is on here (for the most part) is pitchforks out for the cadre scum? I’m not absolving anyone, or defending anyone, on the contrary, I want all sides to be held equally to account – if the pinstripe and whisky brigade in their plush offices around the world faced a nice stretch in Sun City, maybe they’d think twice about engaging in this kind of sleazy activity?
Fair enough but I think you are conflating despair with bias. Who other than the cadres would cause any heads to roll? They are the root cause of the problem. If they weren’t so crooked business would be scared to bribe them as they are in other countries that aren’t basket cases like ours. Calling for any accountability, let alone the equitable variety is so much wasted breath here, now and for the foreseeable future. The shingle outside our national shop says ‘Cheap government for sale’ and every shady ‘business person’ within sniffing distance beats a path to our door to take up the offer in the knowledge that even when they are found out nothing will happen to them here.
The Foreigners have been held to account! Why aren’t we calling for the blood of the local Receivers of Bribes??????
I believe the problem with state procurement is that the bribes are solicited. If the private sector company doesn’t “play ball” they are simply eliminated from the process.
I bought a business that had various metros amongst it’s clients and I can confirm that is exactly how it worked. We simply didn’t make the cut when it came to tender processes and those who ’10 percented’ sailed through. This was in the early 2000’s when the cadres were barely warm in their seats yet. It’s unlikely to have got better since. That experience was the beginning of my recovery from being a dyed in the wool lefty and admirer of the ‘glorious liberation movement’.
Big corporates tend to implicate themselves by using US$ & alerting the Yanks. They are never stopped by the fines they have to pay. The budget for these fines.
Spot on. Think about what VW did as far as emission controls is concerned on their cars. They lied and new that they would be caught out but this was also budgeted for and was cheaper than being honest and losing Billions of $ in slaes.
Seduce Another Politician
Ha ha! Very good!
The US suffers no direct loss and will get R4bn from SAP. We suffer huge losses and will (might?) get a measly R750m. Who is cooking the book?
Read the NPA statement again, a not at all measly R2.2b is being paid back to the SOEs.
Will those who were bribed ever be brought to justice??????
Ha ha
Our previous president and current president the mattress king are both thieves so the answer is no. The ANC will loot until every brick and roof tile is gone and nobody will be held accountable. We saw this happen in Mozambique, and in Zimbabwe. South Africa is well on the way to becoming a failed state before 2030.
Read the last para of p1 of the NPA statement again, chances are higher than zero.
I’ve come to the conclusion that NPA statements are no more than a notch or two above Ramaphosa promises credibility wise. I’ll give them the benefit of the doubt for a little while longer that they may really mean what they say but just cant deliver and don’t just flat out lie like he does.
restitution should be that SAP pays back 300% of what they charged the country on all deals with any level of government for the last decade. IF they disclose who received what and cooperate in prosecution. Else it is 1000%
That’s how you stop bribers. It must hurt more than you can imagine.
Agreed!
Would love to see that!
Who’d they pay
Test
We all need to know the actual names of the individuals and companies that SAP and the Guptas channelled these bribes to. Otherwise this is just something that we all knew already.
Thievery and corruption tis the way of the ANC( Africa’s newest crooks) only when they are imprisoned and all the stolen assets recovered will we prosper
You are misguided if you think imprisonment of anc officials will help the country prosper. They didn’t bribe themselves. Even those who bribed them must be imprisoned.
We (as South African) have the means to charge the employees of big foreign companies (it’s too expensive to take them on & it will drag on for years). We must do what is in our power & imprison local bribe takers, so that taking bribes becomes a huge risk.
These companies should come clean and name and shame their government criminal partners
Read last para of page 1 of the NPA statement above again… carefully.
At the centre of every bribe, the private sector is key. Everyone has a moral obligation to not be corrupt.
Please name, prosecute and incarcerate the government official scum involved. One can only dream…
One would think most of the fine would be paid to SA institutions, but no, it’s to American
Wrong, read the NPA statement again
The ANC must be one of the most corrupt governments in the world, and they have the audacity of condemning Israel. When will the west wake up.
Wonder where the R2b fine will end up?
As far as I’m concerned Jacob Zuma started the whole Gupta saga and state capture and should be tried for treason, also his very wealthy son Dudisane who benefitted as well should be tried in a court of law.
If only shoulds were woulds msanzi wouldn’t be the failed state it is.
Brilliant, Scheisse Angst und Probleme !
Now when is Jacob Zuma going to be brought to book ?!?!
SAPS should be banned from doing business with SA. Oh, just a thought. Did SARS investigate the SA beneficiaries.
SAP is not a person. It is a corporate screen behind which there lurks a set of individuals who actually committed the crimes and who are being exculpated by the nonsense of a corporate entity giving some money to a corporate watchdog. The fine is no more than a small levy against the proceeds of individual criminal acts. Until such time as the world stops the nonsense of granting pseudo-human status to accounting sophistries and reverts liability and culpability to the actual human owners of the entities, corporate corruption and financial wrongdoing can not be stopped.
This isn’t a victory for justice or law or any of that gaslight – it’s a victory for the use of corporate shields to exculpate individual wrongdoing and greed. Corporate business as usual.
Read last para of p1 of NPA statement above again… carefully
What about our goverment officials? Are they getting away with their loot? Are they getting fired?
It’s sad most ordinary people in this country don’t understand the impact of these criminal practices. In effect, SA Government Ltd has been paying hundreds of billions of rands more for goods and services than they should have, depriving the country of these funds for housing, medical attention, schooling, effective policing, infrastructural development and all the other services which they are supposed to be taking care of. Just one of the many crooked projects the bunch of clowns in government pushed through was the E-Tolls saga!
Makes me sick to see SARS cracking a whip behind the millions of ordinary people just trying to make a living!
We need Dr Mbalula to help us out here. Viva General! Viva! The man of the truth. I love him.
Would that be the same ‘Dr Mbalula’ who got the freebie R680k family holiday from the people who were awarded the contract for the olympic unifoms while he was minister of playing games? If it is, you may remember that he was also the doctor that oversaw the operation that erased our pesky commuter rail network amongst many other achievements. Lots to love if you are that way inclined I guess.
All will be revealed if you read the full NPA press release.
$37 million paid back to who ?