German software giant SAP ordered to pay R500 million for shady Eskom contracts

The Special Tribunal has ordered German software company SAP to pay around R500 million to the Special Investigating Unit (SIU) within seven days for its involvement in corrupt Gupta-linked contracts at Eskom.

According to the SIU, the settlement stems from two Eskom contracts worth around R1.1 billion awarded to SAP between 2013 and 2016, which the tribunal declared as constitutionally invalid.

The SIU revealed that SAP entered into a Sale Commission Agreement with CAD House CC, a Gupta-linked company. Eskom and SAP then signed an agreement for Cloud services at a contract value of R21.7 million.

Following payments from Eskom to SAP, Gupta-linked CAD House received funds from SAP.

“Findings revealed that the [two contracts] did not comply with the Public Finance Management Act, which resulted in Eskom incurring fruitless and wasteful expenditures in respect of the agreements,” said the SIU.

“The settlement agreement does not absolve SAP or any implicated party from possible prosecution,” it added.

The R500 million payment forms part of a previously reported R2.2 billion fine that SAP has pledged to pay South African state-owned enterprises for their involvement in bribes paid to officials to obtain valuable government business.

Unlike the other payments that SAP will make, the R500 million will go to the SIU and not the nation’s SOEs.

SAP will pay R4.1 billion rand, which consists of a criminal penalty of $118.8 million (R2.2 billion) and administrative forfeiture of $103,396,765 (R1.9 billion).

Read: German software giant fined R4.1 billion in bribery and corruption case involving South Africa