SAP has issued a statement that they have commenced formal disciplinary proceedings against three employees who have since been placed on administrative leave. The company says it uncovered some indications of misconduct in relating to the management of Gupta-related third parties.

A fourth employee, whose name has not been made public along with the other three, has been cleared of any misconduct according to SAP's investigations and they will be returning to work.

"As a global company with a commitment to integrity and compliance, the past three months have been humbling for us. The allegations of wrongdoing in our South African business have had a profound impact on our employees, customers and partners, and on the South African public — and we apologize wholeheartedly for this," said Adaire Fox-Martin, member of the Executive Board at SAP SE.

Earlier in 2017 iAfrikan reported on how SAP's Managing Director was implicated in a SAP licenses purchasing and kickback scandal in South Africa. Upon questioning SAP and their communications company, they, at the time, denied any such scandal only for it later to emerge that the scandal goes beyond what we had initially reported on.

The statement by SAP comes as a result of the company having decided to voluntarily disclose the situation in its South Africa business to U.S. authorities responsible for enforcing the U.S. Foreign Corrupt Practices Act.

Other notable changes initiated by SAP related to this include:

  • Eliminate sales commissions on all public sector deals in countries with a Corruption Perceptions Index (according to Transparency International) below 50, effective immediately. South Africa's rating is 45.

  • Extensive additional controls and due diligence into relationships with sales agents and value-added resellers, including additional audit functions.

  • Additional legal compliance staff to the SAP Africa market unit. They will be based in South Africa and report into SAP's Global Compliance organization.

  • Strengthen its Compliance Committee in the SAP Africa region, consisting of local management, compliance, and other corporate functions, to ensure individual deal sanity and integrity, and promote compliance generally.

Below is the full statement issued by SAP regarding the ongoing Baker McKenzie Investigation.

Status of the Baker McKenzie Investigation

Baker McKenzie initially focused its investigation on SAP's contracts with Transnet and Eskom, and this part of the investigation will conclude by the end of 2017. Following a data analytics search of 8.4 million documents, the law firm has completed a first-level review of 131,609 documents, and a second level review of 52,985 documents. Baker McKenzie has conducted numerous interviews. SAP has also invoked its third-party audit rights with entities understood to be Gupta-related – and these audits are in the early stages.

Baker McKenzie has been contracted by SAP to continue to investigate the public-sector business in South Africa going back to 2010. To date, the investigation has determined that, between December 2014 and November 2016, SAP concluded two contracts for the sale of software to Transnet and two contracts for the sale of software to Eskom, each with the assistance of an entity currently understood to have been Gupta-related.

In connection with these four contracts, SAP provided software and received revenue totaling approximately ZAR 660 million (approximately USD 48 million), and paid commissions to entities currently understood to be Gupta-related totaling approximately ZAR 94 million (approximately USD 6.8 million). The amounts actually paid to the third parties totaled approximately ZAR 107 million (approximately USD 7.7 million) because, by contract, each commission payment included an amount of VAT for taxes due on the receipt of the funds.

In December 2016 and June 2017, SAP concluded two additional contracts to provide software and services to Eskom with the assistance of an entity currently understood to have been Gupta-related. No revenue has been received or commissions paid in connection therewith.

After SAP's initial voluntary disclosure, Baker McKenzie has spoken on SAP's behalf with prosecutors at both the DOJ and SEC and has started the process of sharing documents and information.