Life is always filled with surprises. Just when we thought 2023 was a “slow” FCPA enforcement year, DOJ and SEC announced a large enforcement action against SAP for approximately $220 million for FCPA violations in South Africa, and Indonesia. The SEC’s enforcement action for $98 million includes SAP FCPA violations in Greater Africa and Azerbaijan.
SAP is no stranger to U.S, enforcement agencies. In 2021, SAP resolved DOJ charges for $8 million for sanctions violations resulting from software sales to prohibited customers in Iran. Five years earlier, in 2016, SAP resolved FCPA charges with the SEC and agreed to pay approximately $3.8 million for bribery in Panama.
In this recent case, SAP agreed to a three-year deferred prosecution agreement, in exchange for the payment of approximately $220 million in penalties for bribe payments made to South African and Indonesia government officials. DOJ’s resolution includes a criminal penalty of $118.8 million and forfeiture of $103.4 million, along with a credit of $55.1 million against amounts paid by SAP to South African law enforcement authorities, and the full forfeiture amount against disgorgement SAP pays to the SEC or South African authorities. DOJ decided not to impose an independent compliance monitor.
The information filed in federal court in the Eastern District of Virginia charged SAP with two counts: conspiracy to violate the anti-bribery and books and records provisions of the FCPA relating to its scheme to pay bribes in South Africa officials and conspiracy to violate the anti-bribery provision of the FCA for its scheme to pay bribes to Indonesian officials.
In South Africa, from 2013 to 2017, bribed local government, national electricity and water authority officials to secure valuable contracts. In Indonesia, SAP bribed officials from 2015 to 2018 to secure valuable contracts from the Ministry of Maritime Affairs and Fisheries and the state-owned telecommunications agency. The SEC’s Order identified additional bribery schemes beyond South Africa and Indonesia to include Malawi, Kenya, Tanzania, Ghana, Iand Azerbaijan.
Applying the Justice Department’s Corporate Enforcement Policy, SAP earned a 40 percent discount from the applicable sentencing guidelines range given its cooperation and timely remediation. SAP did not voluntarily disclose the conduct. However, SAP immediately cooperated after public reports appeared in 2017 relating to bribery misconduct in South Africa. SAP’s cooperation included production of documents, making employees and officers available for interviews and translating a large number of foreign language documents. In addition, DOJ cited SAP for imaging the telephones of various employees at the outset of the investigation to preserve electronic communications data for review as part of the investigation.
SAP also conducted a root cause analysis, enhanced its compliance program and risk assessment process, eliminated its third-party sales commission model globally, prohibited all sales commissions for public sector contracts in high-risk markets, disciplined employees involved in the misconduct and adjusted its compensation incentives.
DOJ also reduced the applicable criminal penalty in accordance with the Criminal Division’s pilot program for compensation incentives and claw backs. Specifically, DOJ credited SAP with withheld bonuses totaling $109,141 during the course of its internal investigation from employees who engaged in suspected wrongdoing in connection with the conduct under investigation, or who both (a) had supervisory authority over the employee(s) or business area engaged in the misconduct and (b) knew of, or were willfully blind to, the misconduct.
