US authorities probe SAP as Gupta scandal escalates - Moneyweb

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South Africa

US authorities probe SAP as Gupta

scandal escalates
SAP has started disciplinary proceedings against three employees in light of the findings.

Loni Prinsloo, Bloomberg

/
26 October 201717:13

No comments so far

Picture: Akos Stiller/Bloomberg

Corruption allegations surrounding the ANC-connected Guptas ensnared one of Germanys biggest
companies as SAP SE joined international businesses ranging from KPMG LLP to McKinsey & Co in
reporting links
Shares with the family.
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https://www.moneyweb.co.za/news-fast-news/us-authorities-probe-sap-as-gupta-scandal-escalates/[2017/11/08 02:33:04 PM]

US authorities probe SAP as Gupta scandal escalates - Moneyweb

The provider of compliance software said in a statement Thursday that its being investigated by the
US Department of Justice and the US Securities and Exchange Commission after a probe into its
South African business found misconduct in work related to the Guptas, who have strong links with
President Jacob Zuma and his son.

An internal probe by law firm Baker McKenzie found that the Walldorf-based company paid Gupta-
related businesses about R94 million in commission after receiving help to win contracts with two
South African state-owned companies, SAP said.

The US probe marks an escalation in the turmoil surrounding the Guptas, who are at the heart of one
of South Africas biggest post-apartheid scandals. The Indian-born family have been accused of
using their connections to win lucrative state contracts and influence the appointment of government
ministers. The Guptas and Zuma deny wrongdoing.

While SAP didnt find evidence of direct payments to government officials, or employees of
government-owned Transnet SOC Ltd. and Eskom Holdings SOC Ltd., the company reported the
situation to US authorities responsible for enforcing the US Foreign Corrupt Practices Act.

Leaked emails

SAP suspended its South African management team after South Africas opposition Democratic
Alliance party laid charges of corruption and money laundering against the firm after leaked emails
were reported in local media. A similar internal probe by KPMG led the auditor to clear out its top
regional management and led several clients to drop the company.

US consultant McKinsey said this month that it didnt follow its own procedures when carrying out
work for power provider Eskom. South Africas Corruption Watch has said it could report the firm to
the DoJ, while the FBI recently opened its own probe into US links to the family, according to the
Financial Times.

Following SAPs admission today, the police have an obligation to investigate fully and to leave no
stone unturned, the DA said in an emailed statement Thursday.

UK regulators are looking into whether HSBC Holdings Plc and Standard Chartered Plc facilitated
money-laundering as a result of possible ties to the Guptas, while public relations firm Bell Pottinger
LLP collapsed after being found to have run a racially divisive social media campaign for the family.

We have reported misconduct to US authorities, but we have not had any interaction with South
African authorities, SAP executive board member Adaire Fox-Martin told reporters in Johannesburg.
We have not yet made a decision if we will approach South African authorities.

SAP made changes to its business practice in light of the findings. The company will stop paying
sales commissions on public sector deals in countries with a Corruption Perceptions Index below 50,
it said. South Africas rating is 45. SAP also started disciplinary proceedings against three

https://www.moneyweb.co.za/news-fast-news/us-authorities-probe-sap-as-gupta-scandal-escalates/[2017/11/08 02:33:04 PM]

US authorities probe SAP as Gupta scandal escalates - Moneyweb

employees.

While SAPs statement initially sent shares down as much as 0.9% in Frankfurt trading, the stock has
since rebounded, rising 1% to 96.45 euros as of 4:38 pm local time.

Read more on SAP here.

2017 Bloomberg L.P

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US authorities probe SAP as Gupta scandal escalates - Moneyweb

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