SAP, the giant German maker of enterprise software, has found itself ensnared in a scandal involving the Guptas that risks spiralling out of its control. If it believes it is innocent of the serious allegations levelled against it in a Tuesday media report, it needs to act urgently — and transparently — to clear its name.
On Tuesday morning, the Daily Maverick and News24 published a report written by investigative journalism outfits amaBhungane and Scorpio, in which it is alleged that the software maker agreed to pay a 10% “sales commission” to a company controlled by the Guptas to secure a contract worth at least R100m from state-owned Transnet. According to the report, the terms suggested a “thinly disguised kickback arrangement”.
The report, which drew on information contained in the so-called “Gupta Leaks” e-mail trove, said that in August 2015 SAP signed a “sales commission agreement” with the Gupta-controlled CAD House, which sells 3D printers.
“The terms suggest a thinly disguised kickback arrangement: if the Gupta company were the ‘effective cause’ of SAP landing a Transnet contract worth R100m or more, it would get 10%,” the report stated. In the year that followed, SAP paid CAD House R99.9m, it added, “suggesting SAP used the Gupta influence network to drive sales of a billion rand to Transnet and other state-owned companies”.
In its first reaction to the report, SAP hit back hard in a statement, with its MD for Africa, Brett Parker, saying the allegation that it paid kickbacks to secure business is simply untrue. It said it is considering various (unspecified) actions over the publication of the allegations, which presumably includes suing the media houses concerned for damages.
Whether they’re true or not, the allegations against SAP are extremely serious and require urgent action by the company. Not only have they already served to tarnish its image, but it could also now face probes into the allegations in its home market of Germany and in the US, where it is listed on the New York Stock Exchange. The US Foreign Corrupt Practices Act has very serious implications for US companies and directors found to be involved in bribery and corruption.
For now, SAP has simply issued a statement strongly denying the accusations. But that’s not nearly enough. SAP should now appoint an independent organisation, or perhaps an independent committee, to probe the allegations. This entity, which could be an independent auditing firm or even a panel headed by a retired judge, should be given unfettered access to SAP’s executives and to its contracts and financial records to determine whether there is any substance to the allegations. The final report should then be published in full for the public to read.
SAP should take a leaf out of MTN’s book. When the telecommunications group and its top officials were accused by rival Turkcell of bribery in securing an operating licence in Iran, it appointed an independent committee, chaired by top British jurist Leonard Hoffmann, to probe the allegations.
Though MTN continues to face legal action in the South African courts from Turkcell, the findings of the Hoffmann Committee went some way — a long way, I’d argue — to clearing the group’s name in the court of public opinion. Indeed, the committee cleared MTN of wrongdoing in Iran, calling allegations made by rival Turkcell a “fabric of lies, distortions and inventions”.
The committee’s findings couldn’t simply be dismissed because the committee was independent and because it was chaired by a highly respected judge. Hoffmann said in his report that he was given full cooperation by MTN and access to all individuals, information, documents and facilities his team requested. He said MTN had not in any way sought to influence the committee in its deliberations or the formulation of the report.
The Hoffmann report is now likely to form a key part of MTN’s case against Turkcell when the matter is heard by the high court in Johannesburg.
The allegations against SAP in South Africa are so serious that a committee of this nature may be necessary and warranted — assuming the software maker truly believes it has done no wrong, which its statement on Tuesday clearly states.
Parker said in the statement that SAP is “dedicated to conducting every aspect of our business responsibly and in accordance with the highest global compliance and legal standards”. If that’s the case, it should have no problem opening itself to scrutiny by, and cooperating fully with, an independent body — and publishing the outcome of an investigation. — (c) 2017 NewsCentral Media
- Duncan McLeod is TechCentral’s editor