SAP: Sales Commissions, Empty Intermediaries, and Public Contracts

The SAP FCPA case included a $98,451,184 civil settlement with the Securities and Exchange Commission over alleged bribery through intermediaries and false expense records, with credit allowed for payments in South Africa. The commission alleged payments to businesses that did no work and training invoices used to fund bribes. In its criminal deferred prosecution agreement, SAP separately admitted that an employee deleted a payment confirmation before forwarding a signed agreement internally. If you worked in sales, finance or a reseller’s office, those are transactions you might recognize long before an investigation gave them a name.

SAP sold software licenses and related services through subsidiaries, consultants, local business partners and resellers. The German company’s securities were listed on the New York Stock Exchange, and its subsidiaries’ accounts flowed into its consolidated financial statements. A local commission could therefore become part of the parent company’s reported expenses.

On January 10, 2024, SAP admitted bribery in South Africa and Indonesia and false accounting for South African payments under its criminal deferred prosecution agreement with the Justice Department’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Virginia. The Securities and Exchange Commission’s separate settled order alleged Foreign Corrupt Practices Act violations in those countries as well as Malawi, Kenya, Tanzania, Ghana and Azerbaijan.

A Johannesburg Sales Commission Went Straight Through

SAP’s admitted Johannesburg scheme connected a sales commission to a payment to an entity associated with a city official. Under the deferred prosecution agreement’s statement of facts, SAP used an intermediary as a conduit for bribes while supplying software and professional services under a city contract that more than quintupled its revenue from earlier contracts with Johannesburg.

The messages came before the accounting entry. An SAP employee and a senior city official discussed a forthcoming payment, and the official asked whether to provide bank details or receive cash. The official then sent details for a political party’s account, which the employee passed to another SAP employee.

In August 2016, SAP South Africa transferred approximately 2,200,000 South African rand to the intermediary and falsely recorded it as a sales commission. The intermediary then transferred the same amount to an entity its managing director and the SAP employee understood to be associated with a city official. That onward transfer is the part a commission ledger alone would not explain.

The intermediary’s managing director emailed the SAP employee a signed commission agreement and confirmed that the payment had gone through. The employee forwarded the agreement for internal processing after deleting the confirmation. The file moving through SAP retained the document that supported paying a commission and lost the words that explained where the money had gone.

We see more than a misleading account label here. The admitted sequence shows someone editing the explanation as it moved inside the company. For an insider familiar with the deal, the original message, the forwarded version and the bank transfer explain different parts of the same payment.

This is why books, records and accounting controls belong in the bribery story. SAP also admitted that local executives falsely certified the effectiveness of financial-reporting controls, and that the parent filed consolidated statements incorporating the subsidiary’s records and those certifications. The false commission description traveled beyond the local sales office.

Two Commissions, One Empty Intermediary

For South Africa’s Department of Water and Sanitation, SAP admitted using two intermediaries, each paid a 14.9% commission on contract revenue. Each payment sat at the highest percentage allowed without significantly higher approval. The company used that approval ceiling twice on the same business.

The water department managed the delivery of safe water supplies. SAP admitted paying a bribe to a senior department official to obtain or retain its software-and-services contract, routing the money through an intermediary and then another company to conceal it. The commission separately alleged that SAP authorized the partners’ payments despite their failure to meet the transaction’s deliverables.

SAP’s statement of facts described limited diligence when it brought one intermediary on board in 2015. Its later review in 2017 found no financial statements, audited or unaudited, no employee-tax returns and no signs of activity at the claimed business address. The business receiving a commission lacked the ordinary records that would help explain its capacity to earn one.

The company also admitted what followed the bribe. An SAP employee and the intermediary’s director discussed investigative efforts that might uncover the scheme:

The explanation for the payment was still being invented after the money had moved. That puts the signed paperwork in its proper place: the useful question is what the intermediary actually did, who approved paying it and who ultimately benefited. A 2017 Journal of Forensic & Investigative Accounting teaching case about the FCPA illustrates that same gap with a hypothetical sales team using an agent to provide gifts and payments to officials, then recording payments as testing costs.

Public Contracts and the Price of Access

The commission alleged that intermediaries sold access to public decisions as well as receiving commissions after contracts closed. In South Africa, its examples included rail and logistics company Transnet and electricity producer Eskom. Elsewhere in Africa, the order described access to confidential tender documents and efforts to avoid competitive bidding altogether.

For Transnet, the commission alleged that SAP South Africa paid a South African three-dimensional printing firm approximately $1 million in commissions despite receiving no tangible services. The intermediary’s former director acknowledged that it lacked the expertise to provide meaningful services on the deal. When SAP audited it, the firm produced no evidence of services performed.

The Eskom example is even more pointed. The commission alleged that SAP South Africa’s managing director told employees to perform a consultant’s work themselves, while SAP still paid the absent consultant $1.6 million. Eskom officials approved those payments despite the consultant’s absence. The commission’s account has employees doing the job and an intermediary collecting the fee. We would like to know what that fee was buying.

The Reseller Had Already Seen the Tender

The procurement bribery alleged in the commission’s Malawi account began with access to draft tender documents. SAP Africa employees knew that a Zimbabwe-based reseller was obtaining those documents to influence the tender in SAP’s favor. The reseller’s chief executive told SAP sales executives:

In Tanzania, the commission alleged that the reseller shared draft port-authority tender materials with an SAP account executive on a thumb drive. The order connected payments to officials with the specifications that helped SAP win the tender. The advantage was information an honest bidder would not have had.

In Ghana, the commission alleged that a reseller offered an official-associated company 40% of the deal value for help securing a contract without competitive bidding. SAP executives supplied specifications intended to justify that sole-source award. That effort failed, and a different intermediary retained for its political connections secured the deal instead.

The reseller’s continued use also mattered. The commission alleged that SAP Africa allowed it to resume resales after a suspension over suspected bribery even though warning signs persisted. Someone who knows why a suspended partner returned may understand a decision that an approved-vendor listing does not explain.

A Commission Before the Customer Signed

The commission also alleged that an SAP Azerbaijan employee gave improper gifts to state oil-company officials and submitted a false acceptance document before the customer signed the real one. According to the order, the evidence indicated that the employee was trying to claim a sales commission before a promotion made the employee ineligible for additional compensation on that sale.

Indonesia’s Training Invoices and Cash Payments

SAP used intermediaries in both South Africa and Indonesia in the FCPA case. In Indonesia, the commission described public-sector sales made almost entirely through local value added resellers and alleged that two SAP account executives worked with a reseller to make, offer or attempt improper payments involving eight state-owned customers.

The commission alleged that some payments ran through fake training invoices. Reseller employees created shell companies to generate false expenses, building funds for cash bribes, customer excursions and kickbacks to reseller employees. A training expense in the accounts could therefore finance several different beneficiaries.

The commission cited WhatsApp messages using “baggage” and “envelopes” as codes for bribes, along with photographs and videos showing some cash payments. SAP’s sales and reseller employees were discussing how to secure particular deals. In the commission’s account, the messages supplied the business purpose that the invoices concealed.

SAP’s criminal admissions made the cash route concrete. In its deferred prosecution agreement, it admitted that an employee and a consultant coordinated bribes for officials at Indonesia’s Ministry of Maritime Affairs and Fisheries, discussed amounts and arranged a meeting in the ministry lobby. The employee was told to bring an empty envelope.

In the same admitted statement of facts, an intermediary employee accompanied officials from an Indonesian telecommunications agency on a U.S. trip and paid for shopping for an official and a family member. The employee sent messages and shopping photographs back to Indonesia, showing colleagues what the money had bought.

The commission separately alleged that the official and his wife received shopping excursions and dining in New York on their way to SAP’s conference in Orlando. That connection between business travel and personal benefits gives someone arranging a trip a different view from someone approving the software sale. Each may know part of what the customer received.

Microsoft Hungary offers a useful software-sales parallel. Under its non-prosecution agreement, it admitted that employees falsely justified discounts for government sales while resellers retained money for improper payments instead of passing the savings to customers. Those discounts that never reached the customer created money outside the supplier’s ordinary sales account. SAP’s admitted commission entries and alleged fake training invoices raise the same business question: what did the intermediary do with the money?

The Civil Payment and the Controls SAP Changed

SAP’s civil payment obligations required $38,995,405 to be paid directly to the commission and allowed an offset of up to $59,455,779 for qualifying South African payments. A qualifying payment in South Africa could satisfy part of the SEC obligation.

The SEC order also states that SAP paid the equivalent of $21.4 million in its South African water-department civil settlement. That reimbursed the entire amount SAP had received under the covered deals, putting the commission scheme beside the public money that paid for the software.

The Securities and Exchange Commission had already charged SAP over books-and-records and accounting-control violations connected to a Panama bribery scheme in 2016. In the later order, it alleged that SAP had an anti-corruption policy but insufficient monitoring to ensure subsidiaries followed it. Its payment controls also failed to ensure that services had been performed or expenses incurred before third parties were paid.

SAP’s deferred prosecution agreement describes the company eliminating its third-party sales-commission model globally and prohibiting all sales commissions on public-sector contracts in high-risk markets. The commission identified additional changes to accounting controls, third-party oversight and the company’s whistleblower platform. For an insider, knowing who made the exception or why the partner received money can give meaning to records that otherwise look routine. That is the knowledge we work through with you when assessing a foreign-bribery whistleblower case.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Foreign-bribery rewards fall under different programs. We assess foreign-bribery reward opportunities that fit what you know, working with you on the conduct and the records connecting it to the payment.

You Know What the Commission Bought

If you know why a partner was paid, who did the work or what disappeared from an approval email, speak with our whistleblower experts. We build the case with you around the business decisions behind the paperwork and bring in FCPA whistleblower lawyers who understand software sales, intermediaries and public contracts. We stay beside you as your knowledge of the deal becomes evidence the government can act on.