South Africa’s Public Protector investigates SAP’s $60 million contract

Public Protector, an anti-corruption agency mandated by South Africa’s constitution is investigating a 671 million rand ($60 million) government contract with German software firm, SAP, after receiving a tip from an anonymous drafted letter that claimed that there was misconduct in the process of awarding the firm the contract that was unnecessary, because existing  Department of Water and Sanitation (DWS) licenses with SAP covered the same services.

The anti-graft agency “is investigating the SAP licenses. The allegation is that SAP licenses for both the department and water boards were purchased without following due process, ” a spokesman for the agency, Oupa Segalwe, said.

SAP had previously admitted to delinquency in separate deals involving the Gupta brothers who are friends of former South African president Jacob Zuma. However, the independent watchdog is to investigate a contract of providing IT and support services to DWS, awarded to SAP in 2016.

South African Parliament is setting the stage for an investigation into the mismanagement of the DWS that is currently faced with pressure from opposition politicians who believe the department failed to prevent a lingering drought in Cape Town. Though a DWS representative noted that the ministry was not aware of the Public Protector’s investigation and denied any wrongdoing.

SAP is yet to comment on the agency’s inquiry or give details about the contract, while it noted that it was conducting a review of all its deals with the South African government back to 2010. However, Rajiv Sekhri, SAP spokesman said “SAP is aware of this contract which forms part of the broader ongoing SAP South Africa investigation. If we identify any matters of concern we will address and manage them vigorously and comprehensively.”

With the mandate to support and defend democracy of the South African State, the Public Protector had in the past carried out significant investigations including one that concluded that Zuma “benefitted unduly” from the $23 million in state funds that were used to make “improvements” to his private home in 2014, and saw to Zuma repayment of more than $600,000 in 2016. Another investigation by the watchdog in 2016 revealed the Guptas undue influence over awarding state tenders and how global firms involvement.

Several investigations into government and private companies have since moved forward after President Cyril Ramaphosa replaced Zuma in February. Ramaphosa has pledged to crack down on corruption after a string of scandals.

SAP and the Guptas deals

The software maker in March announced that it found evidence indicating several breaches of agreements and misconduct in $50 million South African public sector deals involving the Guptas.

In response to the information, Adaire Fox-Martin, SAP board member said: “The investigation has confirmed that even strong compliance systems are vulnerable and therefore require eternal vigilance.” Noted Reuters.

Findings from an external legal review of five software deals with the state-owned power firm Eskom and Transnet rail-freight company revealed that three suspended executives resigned without their severance pay, a report noted.

Though there was no indication of direct payments to South African Officials, SAP, however, admitted to making payment of over $8 million to intermediate companies controlled by the Gupta brothers.

The Gupta family has been at the center of the country’s corruption investigations as they have been accused of using their friendship with former President Jacob Zuma to win government contracts, of which they denied.