Germany-based software firm SAP has agreed to pay a penalty close to $100 million to settle bribery accusations brought forth by the US Securities and Exchange Commission (SEC).
SAP ultimately acquiesced to a financial penalty of around $100 million for violating the Foreign Corrupt Practices Act (FCPA) due to bribery schemes spanning multiple countries, including South Africa, Malawi, Kenya, Tanzania, Ghana, Indonesia, and Azerbaijan.
According to the SEC’s statement, SAP committed to cease any violations of these provisions and will be required to pay the disgorgement in $85 million, along with a prejudgment interest of over $13.4 million, totaling more than $98 million. However, the penalty will be reduced by SAP’s prior payment of up to $59 million to the South African government regarding the same issue.
The SEC’s order concluded that SAP paid bribes to government officials through third-party intermediaries to secure business with public sector customers in these countries from December 2014 to January 2022. The SEC further revealed that SAP falsely recorded these bribes as legitimate business costs.
“The SEC’s order finds that SAP failed to implement sufficient internal accounting controls over the third parties and lacked sufficient entity-level controls over its wholly-owned subsidiaries,” the SEC stated.
Charles E. Cain, Director of SEC’s FCPA Unit, remarked, “Our order holds SAP accountable for misconduct that spanned seven jurisdictions and persisted for several years and serves as a stark reminder of the need for global companies to be attuned to both the risks of their business and the need to maintain adequate entity-level controls over all their subsidiaries.”
The allegations against SAP in South Africa revolved around various transactions with government departments and companies such as Eskom, Transnet, and the Department of Water and Sanitation. SAP managed to settle some of these cases, with settlements costing millions of dollars.
In response to the South African charges, SAP issued a statement saying, “We are glad to have reached agreements with the US Department of Justice, the SEC, and South Africa’s National Prosecuting Authority regarding historic compliance issues.”
SAP highlighted full cooperation with the authorities and emphasized that the settlements resolve all compliance investigations in the United States and South Africa. The statement asserted that those responsible had left the company more than five years ago.
“SAP’s principles or commitment to ethical behavior are not reflected by the past actions of some former employees and partners,” the statement read, reaffirming the company’s improved internal controls and compliance program in recent years.
“SAP’s robust controls, strong remediation, and compliance enhancements were specifically pointed out by both U.S. and South African authorities,” the company further stated.
Source: Innovation Village