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German firm faces payback bill in South Africa

November 21, 2022

Previous lucrative deals clinched by German software giant SAP in South Africa have returned to haunt the company. A proposal by a graft investigating agency could see SAP forced to repay millions of euros.

Deutschland | Softwarekonzern SAP in Walldorf
Image: Uwe Anspach/dpa/picture alliance

South Africa's Special Investigating Unit (SIU) has applied to the Special Tribunal seeking an order for SAP to pay back €55 million ($56.8 million), which are fees paid to it for deals the SIU said the company scored with the country's ailing power utility, Eskom, when former President Jacob Zuma was still in power.

The Special Tribunal has the same powers as the courts of law and serves as a recovery unit for government assets and wrongfully acquired funds.

The SIU filed papers to the tribunal demanding the return of the funds after finding that the payments did not adhere to the proper procurement laws.

SIU spokesperson Kaizer Kganyago told DW that the unit is not commenting at this stage because it has only filed a motion with the tribunal and is still waiting for a date when the matter will be heard.

Tens of thousands of South Africans from various political and civil society groups march to the Union Buildings to protest against South African president and demand his resignation
The corruption scandal involving the Gupta family angered many South AfricansImage: Mujahid Safodien/AFP/Getty Images

Role of whistleblowers in uncovering the scandal

The amaBhungane Centre for Investigative Journalism reported that SAP hired business development partners that sourced contracts for it in state-owned enterprises.

A company owned by the corruption-linked Gupta family was one of those partners, and it managed to clinch lucrative deals for SAP at Eskom.

In an affidavit, principal SIU forensic investigator Richard Allie said a contract for three years and three months was awarded to SAP in 2016 due to a corrupt relationship between SAP and CAD House, a suspected shell company.

In return, the company was well remunerated by SAP, although according to the SIU papers, it is still being determined what exactly it did.

"Once the money was paid into these Gupta front companies, it very quickly filtered into the rest of the Gupta empire," amaBhungane investigative journalist Susan Comrie told local media.

Former South African President Jacob Zuma
Former South African President Jacob Zuma faces charges of corruption, money laundering and racketeeringImage: Jerome Delay/Pool/AP/picture alliance

Will SAP pay back millions?

She says it remains to be seen what SAP's next course of action will be. "What is going to be fascinating is whether in the face of this, SAP agrees to simply say we will pay back the money or they are actually going to take that further step of responding to the allegations."

SAP has already agreed to pay back millions of euros after the same tribunal ruled that it received a similar irregular payment from deals secured at the Department of Water and Sanitation between 2015 and 2016.

"SAP continues to cooperate fully with the SIU and other authorities relating to their ongoing review of Eskom contracts dating back to 2016,"  Delia Sieff, Head of Communications for SAP Africa, told DW.

She said Eskom remains one of SAP's most valued customers.

The load shedding crisis

Eskom and SAP business dealings

Sieff noted that SAP has partnered with Eskom for over 20 years to provide the best technology solutions to meet its critical business needs.

"Eskom usage of SAP products is strong, and Eskom continues to ask SAP for additional support, maintenance, and training, given Eskom's critical business challenges," Sieff said in a written statement.

She said the German firm is very proud to support Eskom, as it seeks to fulfill its mandate to the people of South Africa.

"SAP looks forward to further engagement with Eskom and the SIU on this matter."

Edited by: Chrispin Mwakideu