CLS Blue Sky Blog

Davis Polk Discusses $220 million Resolution of FCPA Case Against SAP

On January 10, the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) announced parallel resolutions with SAP, a German software company, to resolve investigations into violations of the Foreign Corrupt Practices Act (FCPA).  According to the resolutions, from 2013 to 2018, SAP made improper payments to officials at state-owned entities in South Africa and Indonesia to secure and retain software and professional services contracts with those entities.  The bribes were made directly or through third-party intermediaries, and took the form of cash, political contributions, luxury goods and shopping trips for government officials and their family members, netting SAP approximately $100 million in profits.  In addition, the SEC resolution covered conduct in Malawi, Tanzania, Ghana, and Kenya related to bid-rigging and corrupt payments to government officials between 2014 and 2018, and in Azerbaijan related to improper gifts provided to government officials in connection with deals with the state-owned oil company from 2021 to 2022.

To resolve the matter, SAP entered into an administrative order with the SEC requiring SAP to pay approximately $85 million in disgorgement and $13 million in prejudgment interest, but received an offset of approximately $60 million for payments “made or to be made” to South African authorities in connection with a parallel enforcement action there.  SAP entered into a three-year Deferred Prosecution Agreement (DPA) with the DOJ, in which SAP agreed to pay a criminal penalty of $118.8 million and a criminal forfeiture of approximately $100 million.  DOJ agreed to credit up to $55 million of the criminal penalty to fines owed to South African regulators as well as the forfeiture amount to any disgorgement or forfeiture paid to the SEC and South African authorities, which likely will result in no forfeiture amount paid to DOJ.  In addition, SAP received an approximately $110,000 credit under the Criminal Division’s Pilot Program Regarding Compensation Incentives and Clawbacks because SAP withheld bonuses from employees who were engaged in the misconduct.  No monitor was imposed, and instead SAP will self-report regarding its compliance program during the term of the resolution.

Key Takeaways

There are several noteworthy aspects and takeaways from the resolutions:

Continued growth of international cooperation and coordination: This marks the second corporate FCPA resolution that was coordinated with South African authorities, continuing the longstanding trend in cooperation and coordination with foreign authorities.  We expect this trend to continue, particularly with the establishment of the International Corporate Anti-Bribery Initiative that was announced in December, and that will assign three prosecutors to enhancing and growing international relationships in this space.

This post comes to us from Davis, Polk & Wardwell LLP. It is based on the firm’s memorandum, “SAP resolves FCPA case for $220 million,” dated January 17, 2024, and available here.

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