SAP suspends SA management team - TechCentral

SAP suspends SA management team

Top SAP executive Adaire Fox-Martin is jetting into South Africa to deal with the crisis

German software giant SAP has placed its South African management team on “administrative leave” and promised a wide-ranging probe, to be led by a law firm, into allegations of bribery and corruption involving the Guptas.

In a statement issued late on Wednesday evening, SAP said it has initiated an independent investigation spearheaded by a multinational law firm and overseen by executive board member Adaire Fox-Martin to “vigorously review contracts awarded by SAP South Africa”.

The reaction by SAP marks a distinct shift from the position it had taken earlier, when SAP Africa MD Brett Parker lashed out at local media outlets for publishing the allegations and threatening “various possible actions”. Parker said in a “holding statement” on Tuesday that the “accusations made around the use and payment of sub-contractors” were “unfounded and unsubstantiated”.

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”.

Internal review

SAP in Walldorf has now moved to try to contain the damage, saying it has launched an internal review as part of its “utmost commitment to compliance” and will make the results of the investigation public once it is concluded. (See TechCentral editor Duncan McLeod’s Tuesday column, SAP must open itself to independent probe.)

“Consistent with company policy, SAP has brought in senior expert staff across all relevant functions while the current management team has been placed on administrative leave pending the findings of the review,” the company said in Wednesday night’s statement.

“SAP stands for integrity, transparency and compliance,” said Fox-Martin in the statement. She leads SAP’s business in Europe, the Middle East, Africa and China.

“We strive to be exemplary in the manner in which we serve our customers and partners, and in how we treat our employees. Full transparency and integrity are imperative at our company, and we will not tolerate any misconduct.”

The statement said SAP policy is to “carry out all company activities in accordance with the letter and spirit of applicable legal requirements and therefore maintain the highest standards of business ethics”.

“SAP strongly adheres to its Global Code of Business Conduct and is committed to follow disciplined and transparent transactions.”

Fox-Martin is currently traveling to South Africa to “address the concerns of customers, partners and employees”, it said.  — (c) 2017 NewsCentral Media

4 Comments

  1. I guess this won’t be the last company to have to do this. The questions are
    a) if it was not the Guptas but Joe Soap who was getting the “commission” then would there be this flurry of activity?
    b) is a commission for making sure a deal goes through not just normal business practice? Finders fees are paid all the time on concluded business. Look at the Arms Deal for example….
    c) in this case, what services did the Gupta company perform or was the deal that they needed to be greased, and in turn grease others in Transnet, and who were the beneficiaries of this? Let the Gupta company explain in public.
    In so many of these cases (like the president’s bribery allegations, it is only one side of the transaction that gets prosecuted, in this case maybe SAP…. but it takes two to dance and in this deal probably a whole dance party including the Transnet execs and maybe the ANC itself.
    Follow the money….

  2. Greg Mahlknecht on

    I think you’re right, and taken in isolation each of the transactions don’t seem bad, however given the context of the transaction and the fact that public money was used, makes this a special case which warrants special treatment.

  3. Greg my point is that this is happening now because it is the Guptas, not because it is Africa or anywhere else for that matter – commissions on sourcing business happen all the time all over the world. We pay them to people who sell our product for us or introduce us to potential clients where a sale results, but we only pay them if they add true value. In this case it looks like SAP was introduced to their own Transnet client…or asked to share some of their Transnet revenue with a Gupta company which maybe added no value at all…. we don’t really know. If we look at the commissions to the Guptas on the trains from China, while excessive (R10m or 20% PER TRAIN), there is nothing really untoward about this IF they actually did the sale. If they were just a middleman collecting a top up on the price, then that is theft.
    More interesting to me is not that it went to the Guptas but where it went after that. These guys are fronts for all kinds of things, and nobody would let them do this if there were not big backhanders to the decision makers. Those people AND the Guptas need to go to jail.