September 12, 2018 / 2:33 PM / 9 days ago

South Africa to probe whether kickback was paid for SAP contract

PRETORIA (Reuters) - South Africa’s Special Investigating Unit (SIU) will investigate whether a kickback of more than 35 million rand ($2 million) was paid for a state contract with German software firm SAP, a spokeswoman for the unit told Reuters.

The logo of German software group SAP AG is pictured in Vienna, Austria, July 25, 2016. REUTERS/Leonhard Foeger

South African President Cyril Ramaphosa authorised the SIU investigation last week, after the country’s anti-graft agency started its own probe into a 671 million rand ($45 million) deal SAP signed with the water ministry in 2016.

Asked for comment, SAP said it was reviewing all its public-sector contracts in South Africa dating back to 2010.

SAP is one of several foreign firms to suffer reputational damage in South Africa after becoming entangled in corruption scandals under Ramaphosa’s predecessor, Jacob Zuma.

Ramaphosa has launched a corruption crackdown since replacing Zuma in February, and several investigations into government and private companies have moved forward.

Nazreen Pandor, the SIU’s spokeswoman, said the unit had received information from a whistleblower that a company controlled by an official had received more than 35 million rand for facilitating the deal between the water ministry and SAP.

The SIU will present the findings of its probe into SAP’s work for the water ministry within six months, Pandor added.

A SIU investigator, who did not wish to be named, said the unit believed it had a “strong case” that procurement rules were broken in the SAP deal, based on a preliminary survey of contracts between the water ministry and SAP.

“We are already deep into planning for the investigation. If we find evidence of criminal wrongdoing, we will immediately motivate for a case to be opened,” the investigator said.

SAP said in a statement to Reuters: “SAP continues to cooperate with both the South African and U.S. authorities in their ongoing investigations.”

The German firm said last year that the U.S. Department of Justice and U.S. Securities and Exchange Commission had opened an investigation into the company under the U.S. Foreign Corrupt Practices Act related to South Africa.

In March, SAP admitted to paying more than $9 million to intermediary companies controlled by the Guptas, friends of former president Zuma, relating to deals with South African state firms Eskom and Transnet.

($1 = 15.0475 rand)

Additional reporting by Eric Auchard in London; Editing by James Macharia

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