The central findings confirm that there were payments to Gupta-related entities, indications of misconduct relating to the management of Gupta-related third parties and irregularities in the adherence to SAP’s compliance processes. The investigation also confirms that there is no evidence of any payment or attempted payment made to any South African government official or any employee of an SOE in connection with the Transnet and Eskom transactions. A summary of the investigation findings can be found below.
SAP has been clear from the outset that it will not tolerate misconduct or wrongdoing. Presided over by independent senior legal counsel, SAP instituted disciplinary proceedings against three senior executives, who were put on administrative leave in July 2017 and formally suspended in October 2017. These executives have since resigned from SAP. Under South African labor law, a disciplinary process cannot continue if an employee resigns. No severance was paid to any employee, and SAP reserves its rights in respect of these executives. As reported in October, the fourth employee placed on administrative leave has since returned to work.
Further to the announcement in October 2017 that SAP made significant changes to its global compliance processes, the company has allocated additional legal compliance staff to the SAP Africa market unit. SAP has also strengthened its independent Compliance Committee in the SAP Africa region, and augmented the mandatory annual compliance training that every SAP Africa employee must complete. This includes the certification of SAP’s Code of Business Conduct, with anti-bribery rules.
All South African partners are going through revised due diligence processes. In addition, SAP continues to investigate the public sector business in South Africa going back to 2010. If SAP identifies any further matters of concern, it will address them with the same attention and robustness as the Transnet and Eskom investigations.
In November 2017, SAP notified the national head of the Directorate for Priority Crime and Investigation (Hawks) of its willingness to cooperate with any investigation they may undertake. SAP also continues to cooperate with the U.S. Department of Justice and the U.S. Securities and Exchange Commission, and remains committed to sharing all findings with both local and international authorities.
As a private company, SAP is committed to uncovering and addressing any wrongdoing. SAP has been able to implement sweeping improvements to its internal compliance processes; however, there are limitations to what SAP can achieve in a complex investigation without having the investigative powers of government authorities. Consequently, SAP is fully committed to continue cooperating with both local and international authorities that do have comprehensive legal investigative powers across borders.
“This journey has taught us profound lessons and provided us with reasons to reflect on our business, our processes and our responsibility towards our employees, customers, partners and the South African public,” said Adaire Fox-Martin, member of the Executive Board of SAP SE, who leads SAP’s business in Middle and Eastern Europe (MEE); Europe, the Middle East and Africa (EMEA); and Greater China. “The investigation has confirmed that even strong compliance systems are vulnerable, and therefore require eternal vigilance. While we cannot turn back the clock, we can promise to do better. To this end, we would like to reiterate the apology we made last year to our stakeholders in South Africa. We remain committed to this country and the rest of the continent, and to growing our business and investment here.”
SAP has launched a new go-to-market plan in Africa to maintain business continuity across the continent. In addition, SAP recently announced the opening of an SAP Leonardo Center location in Johannesburg in the third quarter of 2018. SAP will also announce a new SAP Africa managing director next week.
Overview: In July 2017, SAP contracted Baker McKenzie to conduct an investigation into its public sector contracts in South Africa.
Since the investigation began, the law firm has conducted a data analytics search of over 29.6 million documents, followed by a first level review of 202,599 documents, and a second level review of 64,786 documents. It also conducted numerous interviews of SAP employees, former employees and external third parties.
Baker McKenzie has finalized its investigation of SAP’s business interactions with Gupta-related entities in connection with Transnet and Eskom.
To date, the investigation has found no evidence of any payment to any government official or to any employee of an SOE, including any employee of Transnet or Eskom. However, the investigation has uncovered indications of misconduct in issues relating to the management of Gupta-related third parties.
Globally, SAP’s products and services are sold to customers either directly or through intermediaries, including sales commission agents who operate on a commission basis.
All SAP intermediaries, globally, are required to undergo a thorough due-diligence process, which includes an assessment to ensure they possess the relevant technical capabilities required to fulfil the customer’s mandate. All SAP partners are also required to sign an anti-bribery declaration.
The findings of the investigation have led SAP’s Executive Board to institute significant changes to its global compliance processes. These include:
On 8 November 2017, SAP notified the National Head of the Directorate for Priority Crime Investigation (the Hawks) of SAP’s willingness to cooperate with any investigation they might undertake.
SAP continues to cooperate with the investigations being conducted by the US Department of Justice (DoJ) and the US Securities and Exchange Commission (SEC). These investigations came as a result of SAP’s voluntary disclosure on 13 July 2017. Baker McKenzie is in regular communication with these authorities on SAP’s behalf, and has provided more than 100,000 pages of documents to the authorities. SAP has committed to full cooperation with the DOJ and SEC.
On 30 November 2017, the Companies and Intellectual Property Commission (“CIPC”) notified SAP that it had laid charges with the South African Police Service for SAP’s alleged contravention of section 214(1)(c) of the Companies Act of 2008 and section 12(1)(b)(i)(a) of the Prevention and Combating of Corrupt Activities Act of 2004. SAP has advised the investigating officer that the company is willing to cooperate with any investigation they might undertake.
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