On January 10, the Securities and Exchange Commission (SEC) and Department of Justice (DOJ) announced settled charges against SAP, a multinational tech company, for violations of the Foreign Corrupt Practices Act (FCPA). The Germany-based company was accused of bribing government officials in South Africa, Malawi, Kenya, Tanzania, Ghana, Indonesia, and Azerbaijan. However, this is not the first time SAP has faced a fine for bribery-related misconduct.
First Offense: 2016 FCPA Fine
In 2016, the SEC charged SAP with books and records and internal accounting controls violations in connection with a bribery scheme in Panama. The fine required only the disgorgement of $3.7 million in profits and did not involve the DOJ. However, it was likely a missed opportunity for SAP to address bribery-related misconduct.
Second Offense: 2023 FCPA Fine
SAP’s second FCPA fine is much larger and involves misconduct spanning several countries. The DOJ alleged that, SAP, through its agents, engaged in a scheme from at least 2013 to bribe officials and falsify records to gain improper advantages in various contracts with government entities in South Africa and Indonesia. The bribe payments to South African and Indonesian foreign officials were in the form of cash payments, political contributions, and wire and other electronic transfers, along with luxury goods purchased during shopping trips, in return for valuable government business. In addition to these allegations, the SEC charged further misconduct relating to payments to government officials in Malawi, Kenya, Tanzania, Ghana, Indonesia, and Azerbaijan.
Settlement and DPA
As a result of the misconduct, SAP will pay over $220 million to resolve the investigations from U.S. regulators and may face further liability from South African authorities who assisted in the investigation. Additionally, SAP entered into a three-year deferred prosecution agreement (DPA), which requires significant enhancements to the company’s compliance program, and annual reporting to the DOJ on improvements. The DPA will also impose a positive legal obligation to disclose any further FCPA violations that are identified internally during the three years.
Authors: Yu Tong Wang, John Peterson
