German firm SAP to pay Sh35b to settle KRA bribery charges

Kenya Revenue headquarters. [Wilberforce Okwiri, Standard]

SAP, the German software company, will pay US regulators about $222 million (Sh34.9 billion) in fines to resolve investigations into bribery schemes in Kenya and six other countries, US authorities said last week.

US authorities have been probing SAP Africa for bribing government officials around the world including the Kenya Revenue Authority (KRA) in exchange for lucrative tenders.

The US Department of Justice said SAP entered a three-year deferred prosecution agreement to resolve criminal charges that it conspired to bribe government officials in Kenya alongside Indonesia, South Africa, Azerbaijan, Ghana, Malawi and Tanzania, to win business.

SAP also reached a related civil settlement with the US Securities and Exchange Commission to resolve charges over the alleged bribery schemes in Kenya and other countries.

American regulators said their investigations established an SAP regional business partner that helped improperly influence a tender by the KRA in 2015.

US authorities said SAP Africa used resellers to conduct business throughout Greater Africa, including an unnamed Zimbabwe-based reseller that was used to conduct business in Malawi, Tanzania, Ghana, and Kenya.

US officials said the unnamed intermediary engaged in bid-rigging and arranged corrupt payments to government officials concerning SAP Africa deals in all four countries between 2014 and 2018. “SAP Africa again used GA Intermediary to help it improperly influence a tender by the KRA in 2015,” said filings by the US Securities and Exchange Commission seen by The Standard.

SAP markets its software worldwide through various country subsidiaries, including wholly-owned subsidiaries in South Africa, Greater Africa (Malawi, Kenya, Tanzania, and Ghana), Indonesia, and Azerbaijan, which SAP manages and supervises.

US authorities said emails and documents showed that the Kenya country manager for SAP’s region’s intermediary in another bribery scheme shared Tanzania’s Ports Authority draft tender materials with an SAP Africa account executive on a thumb drive to get information on bid specifications that could help win the tender.

SAP Africa executives contacted individuals known as bribe “facilitators” around the time of the Tanzania Port Authority tender to assist the region’s business intermediary in paying bribes to Tanzania Port Authority officials in exchange for the materials that helped SAP Africa win the tender.

The company “has accepted responsibility for corrupt practices that hurt honest businesses engaging in global commerce,” US Attorney Jessica Aber in the Eastern District of Virginia said in a statement.

Authorities said the alleged bribery schemes spanned from 2013 to 2022 and involved falsifying books and records so that the bribes would appear to be legitimate business expenses.

 According to the SEC, in one instance, SAP South Africa paid in 2015 for government officials’ trips to New York, including meals and golf outings, to win a $13.2 million (Sh2 billion) contract with the city of Johannesburg.

Another instance involved an SAP Indonesia account executive allegedly messaging an intermediary: “Hehehe.... This is government bro, to catch a big fish we need to use a large bait.”

The US criminal charges would be dropped after three years if SAP complied with its deferred prosecution agreement, US officials said.

In a statement, SAP said it welcomed the settlements.