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Special Tribunal orders Germany’s SAP to pay R500m in restitution after ‘Gupta-linked’ Eskom contracts

Special Tribunal orders Germany’s SAP to pay R500m in restitution after ‘Gupta-linked’ Eskom contracts
Victoria O’Regan
By Victoria O’Regan
26 Mar 2024
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The R500-million payment is separate from the larger R2.2-billion fine that SAP has pledged to pay in restitution to SARS, and Eskom, Transnet and other South African state-owned enterprises, according to the Special Tribunal.

The German software multinational Systems Applications and Products (SAP) has been ordered by the Special Tribunal to pay the Special Investigating Unit (SIU) R500-million for its involvement in invalid contracts at Eskom. 

The company was given seven days to settle the payment.

In a statement on Monday, the SIU said the order stemmed from a settlement agreement reached between the SIU and SAP on the “validity of two contracts awarded by Eskom, which was upheld by the Special Tribunal”.

“Between 2013 and 2016, Eskom and SAP entered into two contracts for [an] enabling agreement and [a] cloud services agreement worth approximately R1.1-billion. The Special Tribunal order — dated 20 March 2024 — has also declared that the two contacts are constitutionally invalid and therefore set aside,” SIU spokesperson Kaizer Kganyago said in the statement. 

The SIU’s investigation found that the power utility entered into an enabling agreement contract with SAP for licences, maintenance, support and ad hoc services at a contract value of R1-billion. SAP subsequently entered into a sales commission agreement with CAD House, a Gupta-linked company.

Read more in Daily Maverick: Software giant SAP paid Gupta front R100-million “kickbacks” for state business

Eskom and SAP then signed an agreement for cloud services at a contract value of R22-million. 

“Following payments from Eskom to SAP, CAD House received funds from SAP,” Kganyago said.

“SIU findings revealed that the enabling agreement and the cloud services agreement did not comply with the Public Finance Management Act, which resulted in Eskom incurring fruitless and wasteful expenditures in respect of the agreements.”




The Special Tribunal order is in addition to the R2.2-billion corporate alternative dispute resolution reached between SAP and the National Prosecuting Authority (NPA) in January.

In the US, SAP agreed to pay $220-million — more than R4-billion — “to resolve investigations” conducted by the US Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) into violations of the US’s Foreign Corrupt Practices Act.

The US Office of Public Affairs said it had worked with South Africa’s NPA. The NPA said SAP had agreed to pay R2.2-billion in restitution to Eskom, Transnet, SARS and other state-owned enterprises “for its role in Gupta-linked corrupt contracts”.

Read more in Daily Maverick: Golf, luxury and cash — SA govt bribery details emerge as US fines German ‘Gupta-linked’ SAP R4bn

The NPA, at the time, said it was coordinating parallel action via the SIU. 

On Monday evening, the NPA confirmed that SAP was expected to pay R500-million to Eskom and R240-million to Transnet. It paid R344-million to the Department of Water and Sanitation in March 2022. 

In response to a Daily Maverick query, SAP said it was “aware of recent media reports outlining an amount payable, by SAP, to the Special Investigations [sic] Unit (SIU) for contracts deemed invalid”. 



“This forms part of the same settlement announced in January this year, including civil disgorgement amounts previously agreed with the DOJ, SEC and NPA,” it said. 

Cosatu welcomed the R500-million repayment agreed to by SAP. 

“We urge Treasury to allocate a portion of these recovered public funds to the National Prosecuting Authority to enable it to ramp up the war against crime and corruption, and bring those implicated to court. 

“Whilst we welcome this progress, it is critical that the NPA pursue criminal charges against those at [SAP] and other private sector companies for their role in the State Capture project that unleashed so much damage to Eskom, the state, workers and the economy,” it said. DM

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