On Wednesday, German software company SAP reached a settlement with U.S. authorities, agreeing to pay approximately $222 million to resolve investigations into bribery schemes spanning seven countries.
SAP has generated business by paying bribes to government officials to obtain business with public sector customers in the seven countries such as South Africa, Malawi, Kenya, Tanzania, Ghana, Indonesia, and Azerbaijan, according to the Securities and Exchange Commission. SAP has created revenue by employing third-party intermediaries and consultants, who offered bribes to government officials, from at least December 2014 through January 2022.
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.
According to the SEC’s order, SAP inaccurately recorded the bribes as legitimate business expenses in its books and records, despite the fact that certain of the third-party intermediaries could not show that they provided the services for which they had been contracted.
The U.S. Department of Justice disclosed that SAP entered a three-year deferred prosecution agreement to settle criminal charges accusing the company of conspiring to bribe government officials in Indonesia and South Africa to secure business deals.
In tandem with the criminal resolution, SAP reached a related civil settlement with the U.S. Securities and Exchange Commission (SEC) to address charges related to similar alleged bribery schemes in Azerbaijan, Ghana, Kenya, Malawi, and Tanzania, in addition to Indonesia and South Africa.
U.S. Attorney Jessica Aber in the Eastern District of Virginia emphasized that SAP “has accepted responsibility for corrupt practices that hurt honest businesses engaging in global commerce.”
SAP’s financial settlement includes a $118.8 million criminal fine and $103.4 million in forfeiture, as stated by the Justice Department. In response, SAP issued a statement expressing its welcome of the settlements, along with a related settlement with South Africa’s National Prosecuting Authority.
The Walldorf, Germany-based company clarified that it had severed ties with responsible parties over five years ago, asserting that the settlements conclude all compliance-related investigations in the United States and South Africa, Reuters news report said.
Authorities revealed that the alleged bribery schemes transpired from 2013 to 2022 and involved falsifying SAP’s books and records to mask the bribes as legitimate business expenses. According to the SEC, one instance involved SAP South Africa financing government officials’ trips to New York in 2015, including meals and golf outings, to secure a $13.2 million contract with the city of Johannesburg.
Another example highlighted an SAP Indonesia account executive allegedly communicating with an intermediary: “Hehehe…. This is government bro, to catch a big fish we need to use a large bait.”
The Justice Department acknowledged SAP’s efforts to upgrade compliance measures and internal controls, overhaul its commission structure, and cooperate with the investigation. SAP began cooperation immediately after allegations of misconduct surfaced in South African media in 2017.
Under the deferred prosecution agreement, the U.S. criminal charges against SAP will be dropped after three years if the company complies with the terms outlined in the agreement.
In 2016, the SEC charged SAP with books and records and internal accounting controls violations in connection with a bribery scheme in Panama.
