SAP’s Africa Head Has ‘No Recipe’ for Handling Graft Probes


(Bloomberg) --

SAP SE’s Africa head said the German software company is battling to complete investigations following allegations its employees paid kickbacks for government business in East and southern Africa.

SAP suspended executives in South Africa after reports that the Walldorf-based company had dealings with the country’s corruption-linked Gupta family, and in 2018 said $11 million had been improperly paid to win contracts at the state power and transport companies.

Then last year, SAP said it had been accused of “improper conduct” with regard to state business in Kenya and Tanzania. The U.S. Department of Justice is investigating both cases.

“There is no recipe to handle such a complex and unusual situation,” said Cathy Smith, the managing director of SAP Africa, who took the role after the previous management team was removed following the South African allegations. “It’s not ideal, but we are doing it by the book -- it is a very intense process.”

SAP is one of a number of international companies that have found themselves immersed in corruption probes in South Africa. Auditor KPMG LLP and consultant McKinsey & Co. have also become entangled in allegations surrounding the Guptas, who were friends with former President Jacob Zuma and have been in business with his son. The Gupta and Zuma families deny any wrongdoing.

“The process is time consuming, and is taking such a long time because we have to be so forensically accurate,” said Smith, who joined the company from Cisco Sytems Inc. two years ago. “We are reviewing contracts in the region from as far back as 2010.” SAP approached the U.S. authorities when the South African allegations were first made, she said.

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Since taking the job, Smith has spent a lot of her time working to “fundamentally reset the corporate culture in Africa,” she said. Before SAP can take any additional public steps, it has to wait for final feedback from all the authorities it is working with on the different investigations, she said. In South Africa, SAP is also cooperating with local authorities.

“Besides putting in more rigid processes and controls, at the end of the day the organization is made up of individuals that make judgment calls,” she said in an interview. “We have been engaging staff on ethics. We started from executive level, and will continue to do this in the rest of the organization.”

She couldn’t say when the investigations will be concluded.

©2020 Bloomberg L.P.

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