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    TechCentralTechCentral
    Home » News » Gupta scandal escalates

    Gupta scandal escalates

    By Loni Prinsloo27 October 2017
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    SAP’s Adaire Fox-Martin

    Corruption allegations surrounding South Africa’s politically connected Guptas ensnared one of Germany’s biggest companies as SAP joined international businesses ranging from KPMG to McKinsey & Co in reporting links with the family.

    The provider of business software said in a statement on Thursday that it’s being investigated by the US department of justice and the US Securities and Exchange Commission after a probe into its South African business found misconduct in work related to the Guptas, who have strong links with President Jacob Zuma and his son.

    An internal probe by law firm Baker McKenzie found that the Walldorf-based company paid Gupta-related businesses about R94m in commission after receiving help to win contracts with two South African state-owned companies, SAP said.

    Following SAP’s admission today, the police have an obligation to investigate fully and to leave no stone unturned

    The US probe marks an escalation in the turmoil surrounding the Guptas, who are at the heart of one of South Africa’s biggest post-apartheid scandals. The Indian-born family have been accused of using their connections to win lucrative state contracts and influence the appointment of government ministers. The Guptas and Zuma deny wrongdoing.

    While SAP didn’t find evidence of direct payments to government officials, or employees of government-owned Transnet and Eskom, the company reported the situation to US authorities responsible for enforcing the US Foreign Corrupt Practices Act.

    SAP suspended its South African management team after leaked e-mails were reported in local media. A similar internal probe by KPMG led the auditor to clear out its top regional management and led several clients to drop the company.

    FBI probe

    US consultant McKinsey said this month that it didn’t follow its own procedures when carrying out work for power provider Eskom. South Africa’s Corruption Watch has said it could report the firm to the DoJ, while the FBI recently opened its own probe into US links to the family, according to the Financial Times.

    “Following SAP’s admission today, the police have an obligation to investigate fully and to leave no stone unturned,” the DA said in an e-mailed statement on Thursday.

    UK regulators are looking into whether HSBC and Standard Chartered facilitated money laundering as a result of possible ties to the Guptas, while PR firm Bell Pottinger collapsed after being found to have run a racially divisive social media campaign for the family.

    “We have reported misconduct to US authorities, but we have not had any interaction with South African authorities,” SAP executive board member Adaire Fox-Martin told reporters in Johannesburg. “We have not yet made a decision if we will approach South African authorities.”

    SAP made changes to its business practices in light of the findings. The company will stop paying sales commissions on public sector deals in countries with a Corruption Perceptions Index below 50, it said. South Africa’s rating is 45. SAP also started disciplinary proceedings against three employees.  — Reported with assistance from Paul Burkhardt and Stefan Nicola, (c) 2017 Bloomberg LP



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