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German company linked to bribing Tanzanian officials fined $222 million
What you need to know:
- This story has been updated to include statements from SAP and SEC
A German software company, SAP, that was being investigated for offering bribes to government officials in several African countries, including Tanzania, has been slapped with a $222 million fine by US authorities.
SAP is linked to offering bribes to top officials at the Tanzania Ports Authority (TPA) in 2014/2015 to win a tender and is alleged to have colluded with TPA insiders to get preferential treatment on other multiple government deals that were meant for competitive bidding.
SAP will pay $222 million to the United States Securities and Exchange Commission (SEC) after it violated the US Foreign Corrupt Practices Act (FCPA) arising out of bribery deals in Tanzania, Kenya, South Africa, Ghana, Malawi, Azerbaijan, and Indonesia.
In a statement, SAP said it separated from all responsible parties more than five years ago and has since significantly enhanced its global compliance program and related internal controls.
However, a search on Twenty Third Century Security (TTCS) website shows that the company still lists itself as a provider of SAP ERP and maintains a local office in Dar es Salaam.
TTCS was the partner of SAP in the TPA tender, and during local investigations by Tanzanian authorities it was reported that representatives from TTCS/SAP were involved in the bribery case.
Also, a search on the Business Registration and Licenses Authority (BRELA), confirms TTCS as a limited company in Tanzania with a local address.
According to a TPA source, it is claimed that senior officials at the Tanzania Ports Authority were given $800,000 (Sh2.1 billion) in bribes to award a $6.635 million software tender to a partner firm of the German company.
The tender involved the provision of software licenses and services. The tender was awarded to TTCS, which is registered in Zimbabwe.
It is claimed that the TPA officials received the bribes in two installments of $100,000 and $700,000 paid in cash delivered in suitcases.
Despite paying over $4 million for the tender, the foreign company failed to deliver the ICT services (installed 7 of 26 modules).
So Tanzania had to terminate the contract in 2019, upon which cases were filed in 2022 against the top local officials who allegedly colluded in the deal. These include ex-TPA director general, Human Resources manager, acting ICT director, and board chairman of procurement, along with two others.
It is also believed that the foreign TTCS company charged TPA twice the amount for annual software license fees (TPA paid $404,029.03 in annual software license fees, yet the actual required amount was $190,643).
It is also reported that in September 2019, TPA paid the same foreign company from Germany more than $400,000 to review the work done by its Zimbabwean-registered partners. TPA also awarded another contract worth $997,647 for unspecified services.
The Controller and Auditor General (CAG) conducted a special value for money audit which uncovered that the ports authority awarded the contract to TTCS in October 2015 for supply, installation, testing and commissioning of an ICT system.
It is unknown whether Tanzania or any of the African countries linked to the saga will get a cut of the $222 million compensation.
