SAP Accused of ‘Improper Conduct’ Over East Africa Contracts

(Bloomberg) -- SAP SE has been accused of “improper conduct” linked to state contracts in Kenya and Tanzania, a claim that could plunge the German software giant into a second African corruption scandal in as many years.

The graft allegations, which are being investigated by U.S. authorities, relate to deals in 2014 and 2015, the Walldorf-based company said in an emailed statement on Thursday. SAP and Twenty Third Century Systems, a partner across Africa and the Middle East, have since made management changes and strengthened compliance, SAP said.

The news comes a year after SAP said it paid 128.6 million rand ($9.2 million) to companies linked to South Africa's Gupta family, who are accused of numerous cases of state-related corruption. The U.S. Department of Justice and the U.S. Securities and Exchange Commission are investigating the company in relation to those deals as well.

“Our policy is, and always will be, to carry out all company activities in accordance with the letter and spirit of applicable laws,” SAP said.

The fresh allegations were first reported by South African website TechCentral, which said TTCS allegedly bribed officials at the Tanzania Ports Authority with $800,000 to win a $6.6 million contract. The claims were made by a whistleblower and lodged in the U.S., according to the website.

Earlier Troubles

SAP's partner, TTCS, is 49 percent owned by EOH Holdings Ltd., a Johannesburg-based IT firm that's already embroiled in allegations of corruption regarding South African government contracts. The latest claims relate to a time before its investment in TTCS, and EOH was unaware of them when agreeing to the deal, an EOH spokeswoman said.

“It was before our time and we have provided SAP with any information we have on the matter,” she said.

In 2015, another South African company, Standard Bank Group Ltd., ran into trouble in Tanzania when U.K.-based unit ICBC Standard Bank Plc was asked to pay about $33 million to resolve an investigation into bribery at its former Tanzanian unit. The deferred prosecution agreement related to a $6 million payment by former sister company of Standard Bank, Stanbic Bank Tanzania, in March 2013. The payment was intended to encourage Tanzania's government to favor the bank in a private placement.

SAP shares rose 0.2 percent at 94.47 euros in early Friday trading in Frankfurt, valuing the company at 115 billion euros. EOH declined 8.5 percent to 14.81 rand, with the stock having dropped 49 percent this year, making it the second-worst performing share on Johannesburg's benchmark index since the start of January.

--With assistance from Loni Prinsloo.

To contact the reporter on this story: John Bowker in Johannesburg at jbowker2@bloomberg.net

To contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Andre Janse van Vuuren

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