SAP to Pay $220M+ to Close Foreign Bribery Investigations

According to court documents, SAP and its co-conspirators made bribe payments and provided other things of value intended for the benefit of South African and Indonesian foreign officials, delivering money in the form of cash payments, political contributions, and wire and other electronic transfers, along with luxury goods purchased during shopping trips.

Specifically, concerning South Africa, between approximately 2013 and 2017, SAP, through certain of its agents, engaged in a scheme to bribe South African officials and to falsify SAP’s books, records, and accounts, all to obtain improper advantages for SAP in connection with various contracts with South African departments, agencies, and instrumentalities, including.

• The City of Johannesburg,
• The City of Tshwane,
• The Department of Water and Sanitation (a South African state-owned and state-controlled custodian of water services) and
• Eskom Holdings Limited (a South African state-owned and state-controlled energy company).

Log read.

SAP SE (SAP), a publicly traded global software company based in Germany, will pay over $220 million to resolve investigations by the U.S. Justice Department and the Securities and Exchange Commission (SEC) into violations of the Foreign Corrupt Practices Act (FCPA).

SAP’s resolution with the department stems from schemes to pay government officials in South Africa and Indonesia bribes. The department’s resolution is coordinated with prosecutorial authorities in South Africa and the SEC.

According to court documents, SAP entered into a three-year deferred prosecution agreement (DPA) with the department in connection with a criminal information filed in the Eastern District of Virginia charging the company with two counts: conspiracy to violate the anti-bribery and books and records provisions of the FCPA relating to its scheme to pay bribes to South African officials, and conspiracy to violate the anti-bribery provision of the FCPA for its scheme to pay bribes to Indonesian officials.

“SAP has accepted responsibility for corrupt practices that hurt honest businesses engaging in global commerce,” said U.S. Attorney Jessica D. Aber for the Eastern District of Virginia. “We will continue to vigorously prosecute bribery cases to protect domestic companies that follow the law while participating in the international marketplace.”

“SAP paid bribes to officials at state-owned enterprises in South Africa and Indonesia to obtain valuable government business,” said Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division. “Today’s resolution—our second coordinated resolution with South African authorities in just over a year—marks an important moment in our ongoing fight against foreign bribery and corruption. We look forward to continuing to strengthen our relationship with South African authorities and others around the world. This case demonstrates the critical importance of coordinated international efforts to combat corruption and how our corporate enforcement policies incentivise companies to be good corporate citizens by cooperating with our investigations and appropriately remediating so that we can take strong action to address misconduct.”

According to court documents, SAP and its co-conspirators made bribe payments and provided other things of value intended for the benefit of South African and Indonesian foreign officials, delivering money in the form of

• Cash payments,
• Political contributions, wire and other electronic transfers,
• Along with luxury goods purchased during shopping trips.

Specifically, concerning South Africa, between approximately 2013 and 2017, SAP, through certain of its agents, engaged in a scheme to bribe South African officials and to falsify SAP’s books, records, and accounts, all to obtain improper advantages for SAP in connection with various contracts with South African departments, agencies, and instrumentalities, including the City of Johannesburg, the City of Tshwane, the Department of Water and Sanitation (a South African state-owned and state-controlled custodian of water services), and Eskom Holdings Limited (a South African state-owned and state-controlled energy company).

said Assistant Director in Charge Donald Always of the FBI’s Los Angeles Field Office.

• “This successful resolution against SAP is another example of the power of relationships and persistence,”
• “The sustained diligence by the prosecution team and continuous collaboration with South African law enforcement, regulators, and prosecutors identified corrupt activity in multiple countries. The FBI will continue our nonstop efforts to identify, investigate, and prosecute companies willfully engaging in corrupt activities worldwide.”

In addition, between approximately 2015 and 2018, SAP, through certain of its agents, engaged in a scheme to bribe Indonesian officials to obtain improper business advantages for SAP in connection with various contracts between and among SAP and Indonesian departments, agencies, and instrumentalities, including the Kementerian Kelautan dan Perikanan (the Indonesian Ministry of Maritime Affairs and Fisheries) and Balai Penyedia dan Pengelola Pembiayaan Telekomunikasi dan Informatika (an Indonesian state-owned and state-controlled Telecommunications and Information Accessibility Agency).

Said Postal Inspector in Charge of Criminal Investigations Eric Shen.

• “When the mails are used in furtherance of a fraud or corruption scheme, borders are not an obstacle for U.S. Postal Inspectors,”
• “Postal inspectors, with our FBI law enforcement partners and Justice Department prosecutors, followed the widespread trail of bribes and corruption from South Africa to Indonesia. This joint effort resulted in the defendant company paying a significant criminal penalty and agreeing to long-term remedial measures.”

Under the DPA, SAP will pay a criminal penalty of $118.8 million and administrative forfeiture of $103,396,765. SAP will also continue cooperating with the department in any ongoing or future criminal investigation arising during the term of the DPA. In addition, the department will credit up to $55.1 million of the criminal penalty against amounts that SAP pays to resolve an investigation by law enforcement authorities in South Africa for related conduct. The department will credit up to the total forfeiture amount against the disgorgement that SAP pays to the SEC or South African authorities.

Under Part I of the Criminal Division’s March 2023 Compensation Incentives and Clawbacks Pilot Program, SAP’s compliance obligations include implementing criteria relating to compliance in the company’s compensation and bonus system, subject to local labour laws.

Under Part II of the Pilot Program, the department reduced the criminal penalty by $109,141 for compensation that SAP withheld from qualifying employees, which action the company defended in substantial litigation.

The department reached this resolution with SAP based on several factors, including, among others, the nature and seriousness of the offence. SAP received credit for its cooperation with the department’s investigation, which included

• Immediately beginning to cooperate after South African investigative reports made public allegations of South Africa-related misconduct in 2017 and providing regular, prompt, and detailed updates to the department regarding factual information obtained through its internal investigation, which allowed the government to preserve and receive evidence as part of its independent investigation;
• Expeditiously producing relevant documents and other information to the department from multiple foreign countries while navigating foreign data privacy and related laws;
• At the request of the department, voluntarily making company officers and employees available for interviews; (iv) taking significant affirmative steps to facilitate discussions while addressing witness security concerns;
• Raising and resolving potential deconfliction issues between SAP’s internal investigation and the investigation being conducted by the department;
• Promptly collecting, analysing, and organising voluminous information, including complex financial information, at the request of the department;
• Translating voluminous foreign language documents to facilitate and expedite review by the department; and (viii) imaging the phones of relevant custodians at the beginning of SAP’s internal investigation, thus preserving relevant and highly probative business communications sent on mobile messaging applications.

SAP ALSO ENGAGED IN TIMELY REMEDIAL MEASURES, INCLUDING:

• Conducting an analysis of the root causes of the underlying conduct and gap analysis and undertaking appropriate remediation to address those root causes and enhance its compliance program;
• Undertaking a comprehensive risk assessment focusing on high-risk areas and controls around payment processes and enhancing its regular compliance risk assessment process, including by incorporating comprehensive operational and compliance data into its risk assessments;
• Eliminating its third-party sales commission model globally and prohibiting all sales commissions for public sector contracts in high-risk markets;
• Significantly increasing the budget, resources, and expertise devoted to compliance and restructuring its Offices of Ethics and Compliance to ensure adequate stature, independence, autonomy, and access to executive leadership;
• Enhancing its code of conduct and policies and procedures regarding gifts, hospitality, and the use of third parties;
• Enhancing its reporting, investigations, and consequence management processes;
• Adjusting compensation incentives to align with compliance objectives and reduce corruption risk;
• Enhancing and expanding compliance monitoring and audit programs, planning, and resources, including developing a well-resourced team devoted to audits of third-party partners and suppliers;
• Expanding its data analytics capabilities to cover over 150 countries, including all high-risk countries globally; and
• Promptly discipline any employees involved in the misconduct.

SOURCE

https://www.justice.gov/usao-edva/pr/sap-pay-over-220m-resolve-foreign-bribery-investigations