SAP SE, a German software giant, is set to disburse nearly $100 million in response to allegations of bribery involving government officials in Kenya and other African nations, as disclosed by the US Securities and Exchange Commission (SEC).
According to documents obtained by The Sharp Daily, the SEC contends that SAP neglected to prevent unauthorized payments orchestrated by its subsidiaries between 2014 and 2018, in violation of the Foreign Corrupt Practices Act (FCPA), which expressly prohibits the bribery of foreign officials.
The SEC order asserts that SAP subsidiaries in South Africa, Africa, Indonesia, and Azerbaijan were implicated in surreptitious payment schemes to government officials, facilitated through third-party intermediaries, with the aim of securing or retaining business contracts.
Within the Kenyan context, the SEC investigation discovered SAP’s utilization of a Zimbabwe-based reseller, identified as ‘GA Intermediary 1,’ for transactions with the Kenya Revenue Authority and other governmental agencies. The order indicates that this reseller engaged in bid-rigging and orchestrated corrupt payments to Kenyan government officials between 2014 and 2018.
Specifically, the SEC found evidence that “GA Intermediary 1” played a pivotal role in aiding SAP Africa in improperly influencing a tender by the Kenya Revenue Authority in 2015, receiving reciprocal benefits from the deal.
Email correspondence referenced in the SEC order revealed that “SAP Africa disregarded due diligence protocols and overlooked warning signs indicating that the reseller was channeling funds for improper payments in Kenya.”
While acknowledging that SAP employs third parties for legitimate business purposes, the SEC underscored that the use of such intermediaries heightens the risk of improper payments to secure business. The regulator criticized SAP for a lack of oversight, citing the company’s insufficient internal accounting controls to detect or prevent illicit payments. However, the SEC acknowledged SAP’s proactive approach in self-reporting, cooperation, and implementation of remedial measures.
As part of the SEC settlement, SAP has agreed to disburse $98.5 million in disgorgement and interest. This amount includes a credit of up to $59.5 million for related payments to governments in South Africa. Additionally, SAP will incur a $118.8 million criminal penalty in a separate agreement with the US Justice Department.
SAP joins the ranks of multinational corporations, including Walmart, Telia, and Och-Ziff Capital Management, facing significant settlements ranging from nine to ten figures for violations of US anti-bribery laws in recent years.
