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Special Tribunal orders Germany’s SAP to pay R500m in restitution after ‘Gupta-linked’ Eskom contracts

Special Tribunal orders Germany’s SAP to pay R500m in restitution after ‘Gupta-linked’ Eskom contracts
Illustrative image | The cooling towers of Eskom’s Lethabo coal-fired power station in Vereeniging. (Photo: Leon Sadiki / Bloomberg via Getty Images) | South African coins. (Photo: Waldo Swiegers / Bloomberg via Getty Images) | SAP logo. (Photo: Alex Kraus / Bloomberg via Getty Images)

The R500-million payment is separate from the larger R2.2-billion fine that SAP has pledged to pay in restitution to SARS, and Eskom, Transnet and other South African state-owned enterprises, according to the Special Tribunal.

The German software multinational Systems Applications and Products (SAP) has been ordered by the Special Tribunal to pay the Special Investigating Unit (SIU) R500-million for its involvement in invalid contracts at Eskom. 

The company was given seven days to settle the payment.

In a statement on Monday, the SIU said the order stemmed from a settlement agreement reached between the SIU and SAP on the “validity of two contracts awarded by Eskom, which was upheld by the Special Tribunal”.

“Between 2013 and 2016, Eskom and SAP entered into two contracts for [an] enabling agreement and [a] cloud services agreement worth approximately R1.1-billion. The Special Tribunal order — dated 20 March 2024 — has also declared that the two contacts are constitutionally invalid and therefore set aside,” SIU spokesperson Kaizer Kganyago said in the statement. 

The SIU’s investigation found that the power utility entered into an enabling agreement contract with SAP for licences, maintenance, support and ad hoc services at a contract value of R1-billion. SAP subsequently entered into a sales commission agreement with CAD House, a Gupta-linked company.

Read more in Daily Maverick: Software giant SAP paid Gupta front R100-million “kickbacks” for state business

Eskom and SAP then signed an agreement for cloud services at a contract value of R22-million. 

“Following payments from Eskom to SAP, CAD House received funds from SAP,” Kganyago said.

“SIU findings revealed that the enabling agreement and the cloud services agreement did not comply with the Public Finance Management Act, which resulted in Eskom incurring fruitless and wasteful expenditures in respect of the agreements.”

The Special Tribunal order is in addition to the R2.2-billion corporate alternative dispute resolution reached between SAP and the National Prosecuting Authority (NPA) in January.

In the US, SAP agreed to pay $220-million — more than R4-billion — “to resolve investigations” conducted by the US Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) into violations of the US’s Foreign Corrupt Practices Act.

The US Office of Public Affairs said it had worked with South Africa’s NPA. The NPA said SAP had agreed to pay R2.2-billion in restitution to Eskom, Transnet, SARS and other state-owned enterprises “for its role in Gupta-linked corrupt contracts”.

Read more in Daily Maverick: Golf, luxury and cash — SA govt bribery details emerge as US fines German ‘Gupta-linked’ SAP R4bn

The NPA, at the time, said it was coordinating parallel action via the SIU. 

On Monday evening, the NPA confirmed that SAP was expected to pay R500-million to Eskom and R240-million to Transnet. It paid R344-million to the Department of Water and Sanitation in March 2022. 

In response to a Daily Maverick query, SAP said it was “aware of recent media reports outlining an amount payable, by SAP, to the Special Investigations [sic] Unit (SIU) for contracts deemed invalid”. 

“This forms part of the same settlement announced in January this year, including civil disgorgement amounts previously agreed with the DOJ, SEC and NPA,” it said. 

Cosatu welcomed the R500-million repayment agreed to by SAP. 

“We urge Treasury to allocate a portion of these recovered public funds to the National Prosecuting Authority to enable it to ramp up the war against crime and corruption, and bring those implicated to court. 

“Whilst we welcome this progress, it is critical that the NPA pursue criminal charges against those at [SAP] and other private sector companies for their role in the State Capture project that unleashed so much damage to Eskom, the state, workers and the economy,” it said. DM

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Comments - Please in order to comment.

  • Kevin Venter says:

    Amazing what even the big companies will do if they think there is a chance to get away with it. SAP should be ashamed.

  • Jane Crankshaw says:

    Where is the “special tribunal” ordering the return of the Guptas and the billions stolen from taxpayers????

    • Francois Smith says:

      It is called the captured NPA headed by Bathohi under the auspices of Lamola. Lamola hails from my hometown. He is not fondly called “Brains Lamola” – to the contrary.

  • Mike Lawrie says:

    Who are the South Africans who signed the contracts? Are they rotting in jail?

  • Charles Butcher says:

    The plot thickens,time to set an international arrest warrant for the Guptas and confiscate all their assets

  • Rae Earl says:

    The person who facilitated these crooked deals more than anyone else is today receiving support from many thousands of South Africans in his quest to rule once again. His name is Jacob Zuma and he sold his own country to the Guptas who took billions out of the country and now live in luxury while Zuma’s supporters starve. And yet, they support him. Strange.

  • Karin Botha says:

    Spelling error in paragreph 2: contacts should be contracts: “…declared that the two contacts are constitutionally invalid…”. It should read: “ …declared that the two contRacts are constitutionally invalid…”

  • John Patson says:

    Hope they used marked bills to pay the cash so we can all see where it goes — ANC T shirts anyone?

  • Glyn Morgan says:

    Are any readers of this article going to vote ANC? Hands up, anyone? Yes? No?

  • Fuad XXX says:

    When will a serious effort against all the criminals of the Zupta Incorporated be instigated?

  • Bob Fraser says:

    Bob – March 26th 2024 at 10:52
    Who is SAP due to pay R500 million to. Trust it’s not the ANC. (That would a hell of a boost towards election funds). Perhaps it should be stipulated that all money be paid to T he Constit5utional Court.

    hpukd auld ouldn’t like to tho

  • Bob Fraser says:

    Bob – March 26th 2024 at 10:52
    Who is SAP due to pay R500 million to. Trust it’s not the ANC. (That would a hell of a boost towards election funds). Perhaps it should be stipulated that all money be paid to T he Constit5utional Court.

    hpukd auld ouldn’t like to tho

    • William Stucke says:

      Hey, DM! Why are we seeing so many duplicate comments?

      Hi Bob. What happened to your last nine words? Since the typos are repeated, I presume that you didn’t type them twice 🙈

  • David Amato says:

    So who where the Eskom employee(s) who signed off on this dodgy agreement, will they ever face any kind of consequences.

  • Hari Seldon says:

    A fine is a fine – companies like this should face a 10 year ban on doing any business in South Africa – in addition to the fine. This would be a real disincentive. And execs involved should be criminally charged so its not just a civil case. And that includes in Germany or the EU through Interpol.

  • Grenville Wilson says:

    What about senior Cadres in Eskom, Transnet etc, who enabled this deal? Surely there are two sides to any bribes? Why aren’t the Bribees(acceptors of the bribes) in the state enterprises named also brought to book?

  • Leoni Lubbinge says:

    I hope they have switched to another ERP system.

  • Grenville Wilson says:

    It’s great to see SAP being brought to book, but it’s only the Private sector that acts against bribery and corruption. It takes two to tango, when will the Public sector crooks be brought to book??? Unfortunately I think we all know the answer to that one!

  • Sliver Fox says:

    R500m is spit in a bucket for these guys, they’ll pay it and walk away smiling.

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