SAP Rocked by new R772 Million “Double Billing” Scandal

The newspaper said this is affecting hundreds of thousands of people in Giyani, Limpopo, and 55 surrounding villages, who have to go without water.

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SAP logo
SAP logo (Photo Credit: www.shutterstock.com)

SAP is embroiled in a new scandal as report surface of the German-based software giant being involved in a “double billing” scandal with the Department of Water and Sanitation.

The City Press newspaper reported that SAP is in effect “double-billing” the water and sanitation department by hundreds of millions of rands.

The newspaper said this is affecting hundreds of thousands of people in Giyani, Limpopo, and 55 surrounding villages, who have to go without water.

The department bought R950 million in “unlimited” SAP software licences for itself, all nine water boards and the Trans-Caledon Tunnel Authority (TCTA), according to City Press.

The newspaper citing internal memos, emails and other documents it obtained, in June 2016 the chief financial officer of the department’s water trading entity, Mpho Mofokeng, argued against paying for SAP licences.

In his letter, Mofokeng argued:

  • The department had already acquired “unlimited” SAP licences for R178m in 2013 and didn’t need more;
  • The water trading entity had not been consulted;
  • Water boards had not been asked about the move even though they could be using different software packages;

The department would have only needed to pay about the same amount to have them renewed for another five years.

This meant the department wasted R772 million, the difference between R950 million and R178 million.

SAP told City Press that while its investigation into the Transnet and Eskom contracts is complete, our review of all other public sector contracts dating back to 2010 is ongoing and includes contracts with the department of water and sanitation.

“It is our intention and duty, not only to our employees, customers and partners, but also to the South African people, to get to the bottom of these matters, and we intend to keep that promise. We want South Africa to know that we are pursuing this process as quickly and thoroughly as possible,” said SAP.

Tech Firm SAP Paid Millions to Gupta-linked Firms

The German software giant said last month that investigation into its dealings with the Guptas found that payments were made to Gupta-linked companies.

The investigation concluded that about R128.6 million were paid to businesses linked to the Gupta-linked firms to win contacts with state owned enties in South Africa.

In July 2017, SAP contracted Baker McKenzie to conduct an investigation into its public sector contracts in South Africa.

Baker McKenzie has finalized its investigation of SAP’s business interactions with Gupta-related entities in connection with Transnet and Eskom.

To date, the investigation has found no evidence of any payment to any government official or to any employee of an SOE, including any employee of Transnet or Eskom. However, the investigation has uncovered indications of misconduct in issues relating to the management of Gupta-related third parties.

The findings of the investigation have led SAP’s executive board to institute significant changes to its global compliance processes.

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