SAP Finds Signs of Misconduct at Its South African Unit -- Update
March 08 2018 - 6:51AM
Dow Jones News
By Gabriele Steinhauser
JOHANNESBURG -- German software maker SAP SE said Thursday that
an internal probe of its South African unit found "indications of
misconduct" as well as more payments to companies tied to a family
at the center of a political corruption scandal here.
SAP said in October it had reported itself to the U.S.
Department of Justice and the Securities and Exchange Commission
over payments made to entities related to the Guptas, close friends
of former President Jacob Zuma who are being investigated by South
African authorities for alleged corruption.
The Guptas have been accused by government officials and
civil-society groups of using their friendship with Mr. Zuma to
gain lucrative state contracts and influencing government business.
In recent weeks, South African police have raided properties owned
by the Guptas and frozen some of their assets as part of an
expanding investigation into what officials have called their
"capture" of the South African state.
Mr. Zuma, who stepped down as president last month, and the
Guptas, which once controlled a corporate empire stretching from
media to mining, have denied wrongdoing.
The multipronged scandal has dragged in several multinational
companies, including accounting firm KPMG and consultancy McKinsey
& Co. While KPMG and McKinsey have said they regret doing
business with the Guptas or companies associated with the family,
SAP was the first international corporation to say its actions may
have broken U.S. anticorruption laws.
SAP said Thursday that between December 2014 and June 2017 it
paid a total of 112.7 million rand ($9.5 million) to three
companies tied to the Guptas as "commission" for contracts with
South Africa's state-owned rail and port operator, Transnet, and
state power company Eskom. In October, SAP, which is listed in the
U.S. and Germany, said it discovered 94 million rand in payments
made between December 2015 and November 2016.
Philipp Klarmann, head of investigations and anticorruption at
SAP, said the company was in constant contact with U.S.
authorities, which have asked for documents and indicated that they
want to question individuals tied to the South Africa payments. But
he said that it was too early to say whether SAP could face fines
or other sanctions over its behavior in South Africa. "We have
decided not to account for these matters at this point," Mr.
Klarmann said.
Pressure on the Guptas and their suspected collaborators has
escalated since Cyril Ramaphosa took over as president from Mr.
Zuma last month. South African police have declared Ajay Gupta, one
of the three brothers at the center of the family business, a
fugitive after failing to hand himself over to police and arrested
eight alleged business partners. Mr. Gupta's lawyer has denied that
his client was evading the law and that he was out of the country
when he was summoned by police.
A commission tasked with investigating the allegations
surrounding the Guptas and Mr. Zuma took up its work earlier this
month.
Write to Gabriele Steinhauser at
gabriele.steinhauser@wsj.com
(END) Dow Jones Newswires
March 08, 2018 06:36 ET (11:36 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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