SAP SE said it paid 128.6 million rand ($11 million) to companies linked to South Africa’s Gupta family, which is headed by three brothers accused of using their friendship with former President Jacob Zuma to defraud state-owned companies.
A probe by law firm Baker McKenzie found that the payments were made by the German software giant to third parties as commissions on contracts with state utility Eskom Holdings SOC Ltd. and ports and rail operator Transnet SOC Ltd. Three senior executives who were suspended last year have now quit and the Walldorf-based company is co-operating with ongoing investigations by U.S. and South African authorities.
Corruption Allegations
SAP said last year it’s being probed by the U.S. Department of Justice and the U.S. Securities and Exchange Commission over how it won contracts with South African state businesses. It’s one of several international companies to have become involved in corruption allegations surrounding the Guptas, including McKinsey & Co. Inc. and KPMG LLP, though the first to give detail of specific payments.
The Guptas, who are in business with one of Zuma’s sons, are accused of using their political connections to win state contracts and influence ministerial appointments. They and the Zumas deny wrongdoing. On the same day Zuma resigned last month, police arrested five serving and former heads of Gupta-linked companies on charges of fraud and theft. Ajay, the oldest brother, has as-yet-undisclosed charges pending against him and has been declared a fugitive.
Read More: How South Africa’s Cleaning House After Zuma Eviction
SAP reiterated that while it transferred money to Gupta associate Santosh Choubey for contracts won between December 2014 and June 2017, the German company found no evidence of payments to South African government officials or employees at Transnet and Eskom. The company has bolstered its legal and compliance teams in Africa, and is re-doing due diligence on some partners.
SAP has received notice that the Companies and Intellectual Property Commission has laid charges against the company with the South African police related to contraventions of the Companies Act, Fox-Martin said.
“Beginning in the middle of 2014, representatives of the Guptas began to associate themselves with multiple small parties that had experience in the South African IT industry,” Fox-Martin said. “It would appear from the evidence that we have that they approached SAP in South Africa.”
U.S. consultancy McKinsey said last year it had made “several errors of judgment” while working for Eskom, while auditor KPMG said work it did while auditing Gupta companies was sub-standard and several executives quit.