German software company Systems Applications and Products (SAP) has been slapped with a R500 million fine for its collusion in invalid contracts at embattled power utility Eskom.
This comes after the Special Tribunal ordered, on March 20, that the international firm pay the amount to the Special Investigating Unit (SIU) by no later than seven court days, leaving them with a few more days to comply.
In a statement released this week, the SIU said the matter originated from a settlement agreement reached by the SIU and SAP on the validity of two contracts awarded by Eskom, which was upheld by the Special Tribunal.
“The SIU was, in terms of proclamation R.11 of 2018, authorised by President Cyril Ramaphosa to investigate allegations of corruption, malpractice, and maladministration in the affairs of Eskom,” said SIU spokesperson Kaizer Kganyago.
He said the SIU investigation revealed that between 2013 and 2016, Eskom and SAP entered into two contracts, an Enabling Agreement and Cloud Services Agreement worth about R1.1 billion.
However, Kganyago added that the settlement agreement did not absolve SAP or any implicated party from possible prosecution.
He said the SIU’s investigation found that Eskom entered into an Enabling Agreement contract with SAP for licences, maintenance, support and ad hoc services at a contract value of R1 037 045 965.50.
“Thereafter, SAP entered into a Sale Commission Agreement with CAD House CC, a Gupta-linked company.
“Furthermore, Eskom and SAP signed an agreement for cloud services at a contract value of R21 712 514.82. Following payments from Eskom to SAP, CAD House received funds from SAP.
“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,” Kganyago said.
He said the SIU had referred any evidence pointing to criminal conduct to the National Prosecuting Authority (NPA) for further action.
Speaking to The Star yesterday afternoon, Kganyago said that as far as he was concerned, SAP had not yet paid the amount into their account.
However, the company had reportedly said it was aware of the order by the Special Tribunal.
In the order, delivered by Special Tribunal president Judge L Modiba, stated that the SAP Services Agreement Order Form No. 01 concluded between Eskom and SAP on November 25, 2016, (the Enabling Agreement) was declared constitutionally invalid and set aside.
He added in part: “The order form for SAP Cloud Services Agreement concluded between Eskom and SAP on 15 December 2016 (the Cloud Services Agreement) is declared constitutionally invalid and set aside.
“SAP shall be considered to have been fully compensated for all such software licences or services under the agreements and it is recorded that SAP undertakes to treat Eskom's entitlement to continue to rely on the software licences which accrued under the agreements as unaffected by the settlement agreement entered into between the the SIU, Eskom and SAP the terms of which are reflected in this Order (the Settlement Agreement) or the declarations of invalidity and unlawfulness.”
There was no order for costs.
It’s not the first time the company has found itself in hot water.
The company was once reportedly fined R2.2bn, which they pledged to pay in restitution to state enterprises such as the South African Revenue Service (Sars), Eskom and Transnet.
The Star