The Washington D.C.-based Securities and Exchange Commission (SEC) has announced charges against SAP SE- a German multinational software company for bribery schemes to government officials in South Africa, Malawi, Kenya, Tanzania, and Ghana, and other two Asian countries⏤ Indonesia and Azerbaijan.
SAP, also known as System Analysis Program Development has data management operations in 157 locations across the globe.
The software firm violated the Foreign Corrupt Practices Act (FCPA) and has agreed to monetary sanctions of nearly USD100 million in disgorgement and prejudgment interest to settle the SEC’s charges.
The Act was enacted in 1977, and it generally prohibits the payment of bribes to foreign officials to assist in obtaining or retaining business. The Act can apply to prohibited conduct anywhere in the world and extends to publicly traded companies and their officers, directors, employees, stockholders, and third-party agents.
In an investigation, The Exchange Commission found that SAP, whose American Depositary Shares are listed on the New York Stock Exchange, violated the law by employing third-party intermediaries and consultants from at least December 2014 through January 2022 to pay bribes to government officials for the countries in question.
Investigations reveal that the bribes were paid to obtain business with public sector customers. The company is said to have inaccurately recorded the bribes as legitimate business expenses in its books and records, even though certain of the third-party intermediaries could not show that they provided the services for which they had been contracted.
The Exchange Commission also found that SAP failed to implement sufficient internal accounting controls over the third parties and lacked sufficient entity-level controls over its wholly owned subsidiaries.
“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,” said Charles E. Cain, Chief of the SEC Division of Enforcement’s FCPA Unit.
In 2016, the Exchange Commission charged SAP with books and records and internal accounting controls violations concerning a bribery scheme in Panama.
SAP consented to the Commission’s order finding that it violated the anti-bribery, record keeping, and internal accounting controls provisions of the Securities Exchange Act of 1934.
Letters to My Younger Self: Gloria Sebikari — “Take the Risk. Say the Hard Thing. Rest When You Need To.”SAP agreed to cease and desist from committing or causing any violations of these provisions and to pay disgorgement of USD 85 million plus prejudgment interest of more than USD 13.4 million, totalling more than USD 98 million, which will be offset by up to USD59 million paid by SAP to the South African government in connection with its parallel investigations into the same conduct.
The Exchange Commission’s action is part of a coordinated global settlement that includes the United States Department of Justice (DOJ), and criminal and civil authorities in South Africa.
In its parallel case, SAP agreed to pay the Department of Justice a USD118.8 million criminal fine and a forfeiture of approximately USD103 million, of which USD85 million will be satisfied by the company’s payment of disgorgement under the Securities Exchange Commission’s order.
SAP responds
The company released a statement indicating that it has entered into final settlement agreements with the U.S. Department of Justice (DOJ), U.S. Securities & Exchange Commission (SEC), and South Africa’s National Prosecuting Authority (NPA).
“As noted in the settlement agreements, SAP conducted a thorough and extensive investigation into historical misconduct and fully cooperated with the authorities,” the company wrote.
SAP also noted that it separated from “all responsible parties” more than five years ago and has since significantly enhanced its global compliance program and related internal controls.
“Our significant remediation efforts, combined with our full and proactive cooperation with the authorities, have led to full resolutions of these matters,” a company statement concludes in part.