THE BLOG

SAP Has Shown Us That Bribery Doesn't Happen In A Vacuum

The thing about bribery is that it is seen as a bagatelle and essential to get things done in certain countries.

08/11/2017 04:59 SAST
Mike Hutchings/ Reuters

The software company called SAP (Systems, Applications and Products in Data Processing) must be doing well for Dietmar Hopp, who founded the company with four ex-IBM colleagues, to be a football club owner and listed by Forbes as one of Germany's wealthiest men.

SAP, which Forbes ranked as the 13th largest tech company in the world, develops and distributes software that facilitates the efficient running of organisations, as key business functions are managed through a unified system. The real-time processing software designed by SAP is secure and stable. It makes planning, scheduling, tracking and management easier in any organisation with the appropriately trained personnel; thus, day-to-day operations will consequently run more efficiently.

SAP software does not come cheaply, yet the supplier boasted 12-million users and 121,000 installations worldwide in 2016, making SAP the third-largest independent software supplier. With Oracle the only real alternative followed by Microsoft Dynamics, SAP enjoys world-wide success because of its high-quality products and service.

Given SAP's market position, it was completely unnecessary for the company to pay more than R100-million in kickbacks to a company linked to the infamous Gupta family.

As AmaBhungane and Scorpio revealed earlier this year, SAP agreed to pay a 10 percent "sales commission" to a Gupta-controlled company in order to be awarded a lucrative deal with Transnet. After the business software giant initially rejected claims of paying bribes, it suspended the South African management team and launched an investigation into the allegations.

SAP has now confirmed that it paid R107-million as sales commission on deals in excess of R660-million, with state-owned entities Transnet and Eskom. SAP also reported itself to the US securities and exchange commission (SEC) and the US justice department (DOJ) for potentially violating US laws.

It is possible that SAP's offer to Transnet and Eskom was the best for a high-quality product and service, and this would have made the paying of a bribe completely unnecessary -- yet they did it.

Critics were quick to question the reporting to US authorities and not to South African's Directorate for Priority Crime Investigation (the Hawks). The DA spokesperson insisted that SAP disclose evidence to the South African authority while the EFF's Mbuyiseni Ndlozi urged government departments to stop working with SAP.

It looks like SAP had the number of the SEC offices in New York on speed-dial, because the software company already paid a fine of $3.9-million to the US government agency in 2016, after the company paid bribes to Panamanian state officials in order to secure lucrative state contracts in the Central American country.

Bribery is the act of giving something (often money, gifts or vacations) with the intention of influencing the recipient to treat the one paying the bribe favourably. Internationally, paying off someone in order to benefit is illegal and can be punishable by jail time or the payment of fines. The thing about bribery is that it is seen as a bagatelle and essential to get things done in certain countries. However, bribery results in the service or product for which a bribe was paid -- in order to get the contract -- becoming more expensive, as the money paid as a bribe must be recuperated.

Bribery does not happen in a vacuum. The "this for that" mentality in relation to being awarded lucrative contracts requires an unethical mindset. A decision on who is awarded a contract is not based on which offer is best for the institution but on who paid a kickback; thus, a very expensive offer may be the one that is accepted. It is possible that SAP's offer to Transnet and Eskom was the best for a high-quality product and service, and this would have made the paying of a bribe completely unnecessary -- yet they did it.

The age-old excuse for paying bribes is the loss of business. However, this can be countered, if those offering a service or product, i.e. the ones being asked to pay a bribe, say no and go public with the request for a bribe. For corruption, which is the abuse of a position of trust to gain undue advantage, flourishes when those who ask for kickbacks remain unexposed.

If SAP had acted with integrity and exposed the Gupta-linked entity as wanting to receive a "sales commission" for facilitating the Eskom and Transnet contracts, then they (SAP) would have been treated as heroes by South Africans. It would have been great had SAP exposed the Guptas, who have for the longest time groomed South African decision-makers in government and parastatals resulting in them being at family's beck and call. By exposing the request for a "sales commission", SAP would have shown respect for the citizens of the country, in which the company earns billions of rand.

SAP violated its code of business practice, in which it professes to be against any form of unfair competition, corruption and deception.

The German software company posted record 2nd quarter revenues in 2017, and despite a 27 percent drop still managed to post an operating profit of €926 million. With the payment of a 10 percent bribe to a Gupta-linked company, SAP violated its code of business practice, in which it professes to be against any form of unfair competition, corruption and deception.

By self-reporting to the US DOJ and SEC for potential violations of the US Foreign Corrupt Practices Act while doing business in South Africa, the software giant hopes to minimise the fallout in one of its fastest-growing markets.

If the company's track record in Panama and South Africa is anything to go by, SAP will likely pay another fine to the US authorities in the future.

But it leaves us, the South African people -- harmed by the corrupt actions of the Gupta family, government officials and parastatal decision-makers -- to wonder how many houses could have been built and hospitals better staffed with the money lost to the country because of corruption, of which SAP has now admittedly been a part.