Software firm SAP had 'no direct contact' with Guptas
Investigation finds no direct connection but there is evidence of payments to Gupta-linked companies
Global software company SAP says there is no evidence that any of its employees had direct contact with the controversial Gupta family in relation to contracts with Eskom and Transnet.
But, there was evidence that payments were made to Gupta-linked entities, which includes Duduzane Zuma’s CAD House, and with indications of mismanagement and irregularities in adherence to SAP’s compliance processes.
These were the findings of an investigation by international law firm Baker McKenzie into SAP’s public sector contracts in South Africa. The investigation started in July 2017.
The investigation found there was no money paid or an attempt to pay any South African government official or SOE employee in connection with the Transnet and Eskom transactions.
Philipp Klarmann, SAP investigations and anti-corruption head, however said the company could not say if any of the third party Gupta-linked entities made such payments.Adaire Fox-Martin, SAP’s president of global customer operations Europe, the Middle East and Africa, parts of Europe and greater China, said SAP was committed to uncovering and addressing any wrongdoing.
“We have been able to implement sweeping improvements to our internal compliance processes. However, there are limitations to what we can achieve in a complex investigation without having the executive powers of government authorities.
Fox-Martin said SAP had concluded two contracts with Transnet and four with Eskom between December 2014 and June 2017, with Global Software Solutions (GSS) and CAD House acting as commissioned intermediaries.
She said the investigation found that the principle contact for GSS and CAD House was Gupta intermediary Santosh Choubey, an employee at Sahara.
SAP already had an existing relationship with both Transnet and Eskom before utilising GSS and CAD House.
Fox-Martin said this was one of the question marks SAP raised over its internal process in accepting these partners.Neither Eskom nor Transnet had instructed SAP to use CAD House or GSS.
“It would appear, from the evidence we have, that they approached SAP in South Africa,” she said.
SAP became embroiled in the Gupta scandal last year along with other companies, such as consulting firm McKinsey and Trillian Capital Partners, which were all linked to Eskom contracts.
The tranche of leaked Gupta e-mails showed not only how kickbacks were allegedly paid but also how the Guptas gained access to highly confidential draft contracts.
Fox-Martin said one of the contracts involved “a commission” of 10% while the other five contracts involved a commission rate of 14.9%. This was just below the 15% threshold which would have triggered an SAP executive board review of the deals, she said.The two contracts with Transnet were for the sale of software. SAP received R65-million for a December 2014 contract and paid GSS approximately R7.4-million and received R100-million for a September 2015 contract paying CAD House R17-million.
Of the four contracts with Eskom, SAP only received payment for two of them – a March 2016 contract for which it received R61.5-million with CAD House receiving R8.6-million and a November 2016 contract for which SAP was paid R434-million and CAD House again receiving R73.7-million.
The R434-million paid by Eskom to SAP included an allocation for consulting services to be provided in the future.
In March 2017, SAP concluded a subcontract with Lejara Global Solutions, another Gupta-related company, to assist with services to Eskom. In June that year SAP paid the company R21.9-million.
According to the Baker McKenzie report, the subcontract between SAP and Lejara Global Solutions called for the software company to pay R17-million at the conclusion of the consulting project, which finished in late July 2017.
However, SAP declined to make any additional payments.
The report also found that Eskom never paid SAP for two contracts – a December 2016 one worth R21-million and a June 2017 one worth R42.15-million – and no commissions were paid.
Eskom said it was aware of the findings of the SAP investigation and had discussed these with the software company on Wednesday.
The power utility would conduct its own investigation into the matter.