INDICATIONS OF MISMANAGEMENT
SAP comes clean on payments to Gupta-linked entities
Global software company SAP has found no evidence showing that any of its employees had direct contact with the Guptas in relation to contracts with Eskom and Transnet.
However, there was evidence that payments were made to Gupta-linked entities, which included Duduzane Zuma’s CAD House.
There were also indications of mismanagement in relation to the third-party companies and irregularities in adherence to SAP’s compliance processes.
These are the findings of an investigation by international law firm Baker McKenzie of SAP’s public sector contracts in SA, which started in July 2017.
The investigation found there was no money paid or any attempt to pay any government official or parastatal employee in connection with the Transnet and Eskom transactions.
However, Philipp Klarmann, SAP investigations and anticorruption head, said SAP could not say if any of the third-party Gupta-linked entities had 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 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. The probe found that the principal contact for GSS and CAD House was Gupta intermediary Santosh Choubey, an employee at Sahara.
SAP already had a relationship with 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 SA,” Fox-Martin said.
SAP became embroiled in the Gupta scandal in 2017, along with other companies, including global consulting firm McKinsey and Trillian Capital Partners, which were linked to Eskom contracts. The tranche of leaked Gupta e-mails released in 2017 showed not only how kickbacks were allegedly paid in the dealings of state-owned entities 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. There were two contracts with Transnet for which SAP received R165m. It paid GSS about R7.4m in commissions and CAD House R17m.
Of the four contracts with Eskom, SAP received payment for two of them: a March 2016 contract for which it received R61.5m, with CAD House receiving R8.6m; and a November 2016 contract, for which SAP was paid R434m and CAD House R73.7m.
In March 2017, SAP concluded a subcontract with Lejara Global Solutions, another Gupta-linked company, to assist with services to Eskom. In June, SAP paid the company R21.9m.
According to the Baker McKenzie report, SAP had to pay Lejara Global Solutions R17m at the conclusion of the project, which finished in July 2017. However, SAP declined to make additional payments.
The report also said that Eskom had not paid SAP for two contracts — a December 2016 one of R21m and a June 2017 one worth R42.15m.
Eskom said it was aware of the findings and had discussed these with the software company on Wednesday.
The power utility would conduct its own investigation.