A new report by investigative journalists at amaBhungane alleges that global software giant, SAP, knew the full risks of paying kickbacks to Gupta-linked companies – and had known for years that its business practices were open to abuse.
A host of newly leaked memos and documents, which some SAP executives confirmed to amaBhungane as being authentic, reportedly show that the software company knew it was doing business with Gupta companies at least a year before the Gupta leak scandal broke.
The group was also warned, internally, that its use of “business development partners” to secure deals was open to corruption – a position it allegedly ignored, and actively worked to tip-toe around as it continued to sign multi-million rand contracts with local state owned firms.
It was revealed in July 2017 through a series of leaked emails that SAP had paid a Gupta-linked company – CAD House – as much as R100 million in kickbacks, for helping the software group secure contracts with Transnet.
Investigations by amaBhungane at the time found that CAD House was run as a subsidiary of the Gupta-owned Sahara Computers; and it became apparent that it was chosen because of the family’s close links to government officials.
SAP South Africa initially reacted to the reports by denying any wrongdoing, and threatened to take action against the media houses reporting on the matter. However, the group later admitted that it did pay the R100 million “commission” to the Gupta firm, and local management was quickly suspended, and then subsequently resigned.
Turning a blind eye
At face value, it appeared as if SAP was reacting to surprising news that had emerged over the months that the leaked Gupta emails came to light – however, the new leaked documents seen by amaBhungane show that the firm was alerted to the Gupta connections in 2016 – and should have raised red flags as far back as 2015.
Specifically, a due diligence on CAD House done by SAP in 2015 turned up no links to the Guptas or any political connections – despite the group’s CEO being tied directly to the Guptas’ Sahara Computers, at a time when the first reports of Gupta kickbacks at Transnet were being reported.
In 2016, the Guptas were flagged along with “Zuma” and “state capture”, and several other companies – including CAD House – which were reported to be extracting commissions for state contracts.
When SAP Global was warned about this, the contracts were reportedly put on hold – but the latest leak shows that payments continued to be made to CAD House to secure more contracts from Transnet and Eskom, amaBhungane said.
Between May 2016 and July 2017, when the scandal finally broke, the leaked documents showed a chain of memos and emails where SAP effectively danced around the Gupta saga – where, ‘on paper’, staff were warned to not do business with shell companies, but in practice ignored clear signs of their “business development partners” being exactly that.
The most striking of these situations is when the shareholding of CAD House was sold off in the wake of the state capture saga to the brother of Sahara Computers’ CEO, and was subsequently deemed by SAP ‘forensic reports’ to be independent of the Guptas.
SAP was again warned that there was no guarantee that the Guptas weren’t pulling the strings in the background, but the group accepted that was an unavoidable risk, and had lucrative contracts on the line. Approval was reportedly given to proceed.
The allegations and information contained in the AmaBhungane report could have massive implications for SAP, especially with a US Department of Justice investigation into the group looming overhead.
Under US law, SAP executives could be found guilty of ‘corrupt practices’ if it is found that they “deliberately closed [their] eyes to what otherwise would have been obvious”, amaBhungane said.
“At the height of state capture, SAP walked into Transnet and Eskom – ‘ground zero’ of the Guptas’ project to capture state-owned entities – and walked off with contracts worth more than R1-billion after promising to pay R100-million to Gupta-controlled companies. To most South Africans that would be obvious enough,” it said.
SAP provided the following statement in response to the report:
“SAP is aware of latest allegations in the media. As we have previously said, SAP is conducting a thorough investigation of all public sector contracts dating back to 2010.
We understand that our employees, customers and partners, as well as the South African people want answers – as do we.
As we have said from the start of this process, our commitment is to get to the bottom of these matters and we intend to keep that promise. We are not yet clear when the full investigation will be completed, but we want South Africa to know that we are pursuing this process as quickly and responsibly as possible.”
You can read the full, in-depth report on amaBhungane’s website.