German software company SAP will pay more than $220 million to resolve investigations by the U.S. Department of Justice and the Securities and Exchange Commission into violations of the Foreign Corrupt Practices Act (FCPA).
The SEC found that SAP violated the FCPA by paying bribes to foreign officials in South Africa and Indonesia through third-party intermediaries, delivering money in the form of cash payments, political contributions, and wire and other electronic transfers, along with luxury goods purchased during shopping trips.
According to the SEC, SAP bribed South African officials to win business contracts with South African government departments and agencies between 2013 and 2017. The Commission also accused SAP of forging books and records to conceal the bribery.
In addition, the SEC says SAP bribed Indonesian officials between 2015 and 2018 to obtain advantages in winning contracts with various Indonesian departments and agencies. According to the SEC’s order, SAP recorded the bribes as legitimate business expenses in its books and records.
“Today’s resolution—our second coordinated resolution with South African authorities in just over a year—marks an important moment in our ongoing fight against foreign bribery and corruption,” said Assistant Attorney General Nicole Argentieri of the Justice Department’s Criminal Division. “We look forward to continuing to strengthen our relationship with South African authorities and others around the world. This case demonstrates not only the critical importance of coordinated international efforts to combat corruption, but also how our corporate enforcement policies incentivize companies to be good corporate citizens, by cooperating with our investigations and appropriately remediating, so that we can take strong action to address misconduct.”
SAP’s Credit for Cooperation
SAP received credit for cooperating with the department’s investigation, which started immediately after investigative reports made public allegations of the South Africa-related misconduct in 2017. The SEC says SAP provided well-timed information attained through its own internal investigation, which allowed the government to preserve and obtain evidence as part of its independent investigation.
The software company also engaged in timely remedial measures, including:
- Conducting an assessment of the root causes of the underlying conduct, and undertaking appropriate remediation to address those root causes and enhance its compliance program;
- Undertaking a comprehensive risk assessment focusing on high risk areas and controls around payment processes and enhancing its regular compliance risk assessment process, including by incorporating comprehensive operational and compliance data into its risk assessments.
- Eliminating its third-party sales commission model globally, and prohibiting all sales commissions for public sector contracts in high-risk markets;
- Significantly increasing the budget, resources, and expertise devoted to compliance and restructuring its Offices of Ethics and Compliance to ensure independence and access to executive leadership;
- Enhancing its code of conduct and policies and procedures regarding gifts, hospitality, and the use of third parties;
- Enhancing its reporting, investigations, and consequence management processes;
- Adjusting compensation incentives to align with compliance objectives and reduce corruption risk; and
- Enhancing and expanding compliance monitoring and audit programs
SAP has agreed to pay a fine of more than $98 million to the SEC to settle the charges of FCPA violations. The Commission’s action is part of a coordinated global settlement that includes the DoJ and criminal and civil authorities in South Africa. In its parallel case, SAP agreed to pay the DoJ a total of $118.8 million in criminal fines.
Jacob Horowitz is a contributing editor at Compliance Chief 360°