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FCPA Blog Daily News

« Singapore seizes bank accounts linked to Malaysia sovereign wealth fund | Main | Paul Pelletier: Sporadic enforcement isn't effective enforcement »
Monday
Feb012016

SAP settles Panama bribes case with SEC for $3.9 million

The Securities and Exchange Commission said Monday that software maker SAP SE agreed to pay nearly $3.9 million to settle charges that it violated the Foreign Corrupt Practices Act by paying bribes to win business in Panama.

SAP’s faulty internal controls allowed a former vice president of global and strategic accounts, Vicente Garcia, to pay $145,000 in bribes to a senior Panama official and offer bribes to two others in exchange for sales contracts. 

"By excessively discounting the SAP software [up to 82 percent], Garcia created a slush fund that the partner used to pay the bribes and kickbacks," the SEC said.

In December last year, Garcia, 65, of Miami, was jailed 22 months when he appeared before federal judge Charles Breyer in Northern California.

He pleaded guilty in August to one count of conspiracy to violate the Foreign Corrupt Practices Act. He could have been sentenced to five years.

In July 2015, Garcia settled an enforcement action with the SEC. He paid about $92,000 in disgorgement and prejudgment interest.

Garcia personally took over $85,000 in kickbacks for arranging the bribes. That amount was the basis for the disgorgement he paid to settle the SEC civil charges.

The SEC settled Monday's enforcement action against SAP with an internal administrative order and didn't go to court.

Waldorf, Germany-based SAP didn't admit or deny the SEC's findings. It agreed to disgorge $3.7 million in profits plus prejudgment interest of $188,896. 

"The settlement reflects SAP’s cooperation and remedial measures," the SEC said.

The deep discounts Garcia used to create the slush fund were falsely recorded as legitimate discounts on the books of SAP’s Mexican subsidiary and were subsequently consolidated into SAP’s financial statements. 

The discounts should have triggered heightened anti-corruption scrutiny, the SEC said.

"SAP failed to devise and maintain an adequate system of internal accounting controls sufficient to provide reasonable assurances that these improper payments to government officials did not occur," the SEC said.

SAP SE trades on the New York Stock Exchange under the symbol SAP. It sells software licenses and related services to 263,000 customers in 188 countries.

*     *     *

The SEC's Securities Exchange Act of 1934 Release No. 77005, Accounting and Auditing Enforcement Release No. 3736, and Administrative Proceeding File No. 3-17080 (all dated February 1, 2016) In the Matter of
SAP SE
are here.

_____

Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.