So far Pillay has refused to talk about his role in the scandal. But in July, the SIU and the department of water and sanitation filed a civil case against SAP with the Special Tribunal, the court set up to fast-track state capture cases. Included was a 20-page affidavit from Pillay and almost 200 pages of internal emails and SAP documents.<\/p>\n\n\n\n
The SIU and department want SAP to repay R413-million for software licences they allege the department procured irregularly and were never used.<\/p>\n\n\n\n
\n*Read New evidence points to corruption in SAP\u2019s R1-billion water deals<\/a><\/strong><\/p>\n<\/blockquote>\n\n\n\n
Pillay states in his affidavit that he became concerned about the practice of paying commissions to \u201cbusiness development partners\u201d soon after he joined SAP in 2012. Business development partners are outside companies that are rewarded with commissions for bringing new business to SAP or for being what SAP documents describe as the \u201ceffective cause\u201d of concluding new contracts.<\/p>\n\n\n\n
Pillay told the SIU that he took his concerns to a senior executive in SAP\u2019s Europe, Middle East and Africa (EMEA) region.<\/p>\n\n\n\n
\u201c[H]e said if I knew monies were being paid as bribes, we should not use [business development partners]. I told him I would never know if bribes were being paid and that all I could do was rely on the [business development partner] signing an anti-corruption questionnaire\u201d and rudimentary due diligence reports.<\/p>\n\n\n\n
Pillay said he raised his concerns again in 2013 at a conference in Germany but that a senior member of SAP\u2019s global compliance team told him that the practice of paying business development partners was a \u201cglobal policy\u201d.<\/p>\n\n\n\n
Pillay told the SIU that by 2016 \u201cSAP Africa had the highest cost globally for the use of [business development partners].\u201d He claims he approached Peter David, SAP\u2019s new chief financial officer for the EMEA region, to warn him that commissions paid to business development partners were getting out of hand.<\/p>\n\n\n\n
\u201cI told [David] that every public sector deal was being concluded with a [business development partner] and that the cost was impacting both the local subsidiary and the EMEA expense budget.\u201d<\/p>\n\n\n\n
At the time, SAP had just agreed to pay 29.8% of the water department software deal to two business development partners. This would have amounted to R134-million in commission on a single deal, although only R86-million was ultimately paid.<\/p>\n\n\n\n
\u201cHe suggested that we limit the percentage being paid, it did not resolve my concern as to whether bribes were being paid. I therefore requested that he discusses the matter with [SAP global chief financial officer] Luka Mucic … to seek cancellation of this programme \u2026 but there was no feedback whatsoever to this request,\u201d Pillay claims in his affidavit.<\/p>\n\n\n\n
It was only after allegations were first made in February 2017 that SAP paid kickbacks to secure the water department deal, that Pillay got the opportunity to speak to Mucic at another conference in Germany. \u201cI raised my concerns once again \u2026 and asked him if SAP was still going to continue with the programme. His response was, yes \u2013 applied correctly it could add value.\u201d<\/p>\n\n\n\n
Three months later, the #GuptaLeaks scandal broke, bringing to light evidence that SAP had paid more than R100-million in \u201ccommission\u201d that looked like kickbacks to Gupta-controlled front companies for help securing contracts at Transnet and Eskom.<\/p>\n\n\n\n
Pillay, whose signature was on some of the commission agreements, was suspended along with three other executives. While two of his colleagues resigned, Pillay fought to keep his position.<\/p>\n\n\n\n
In his affidavit to the SIU he alleges that, on the day of his disciplinary hearing in February 2018, he was bullied by a senior SAP executive. \u201cHe told [me] that if I continue to defend the matter, even if I was successful in defending myself, SAP would contest the outcome and drag out the process until I was financially bankrupt.<\/p>\n\n\n\n
\u201cI could never compete against the resources of a multinational giant like SAP, I gave into the threat and resigned.\u201d<\/p>\n\n\n\n
How deep does the rot go?<\/h5>\n\n\n\n
Pillay cannot entirely recast himself as a whistleblower though; an email included in his affidavit shows he motivated for SAP to make advance payments to two business development partners seemingly in order to secure the water department deal:<\/p>\n\n\n\n
\u201cDue to the size of the deal the partners are asking for an advance payment of \u20ac600k (\u20ac300k each) to defray expenses they have already incurred. As a principle, we do not pay commission in advance on [business development partner] led deals \u2013 following this request I have received an exception from the compliance team subject to your approval,\u201d Pillay told David in a 27 June 2016 email marked \u201cConfidential\u201d.<\/p>\n\n\n\n
\u201cIf you are in agreement to this advance payment we will get the signed contract from the customer (DWS) tomorrow.\u201d<\/p>\n\n\n\n
David agreed, provided the department \u201cirrevocably signed\u201d the contract first.<\/p>\n\n\n\n
Instead Pillay\u2019s goal in co-operating with the SIU seems to be to show that corruption was an ever-present risk considering how how SAP did business all over the world, and not \u2013 as SAP has suggested \u2013 a breach by a few rogue executives in South Africa.<\/p>\n\n\n\n
Pillay declined to speak to us, but on this point, he has backup from SAP\u2019s own documents: The standard sales commission agreement has many clauses asking new business development partners to promise that they will not engage in corruption, but few explaining what business development partners will do to earn their fees.<\/p>\n\n\n\n
From the water contract we know that one of the tasks SAP set was to \u201cmeet informally with the Minister\u201d in order to sell the deal, even though ministers have no legitimate role in procurement.<\/p>\n\n\n\n
Then minister Nomvula Mokonyane is adamant that these meetings did not take place, but the business development partner was nonetheless paid R86-million.<\/p>\n\n\n\n
New business development partners were also required to undergo a due diligence to ensure, according to the SAP handbook, that they were \u201ca properly licensed\/registered, legitimate business\u201d and \u201cnot merely a shell company … recently created for the purpose of channeling payments\u201d.<\/p>\n\n\n\n
While this approach seems prudent, it also raises the question: Did SAP expect corruption at every turn because often the reason for paying millions to business development partners was otherwise so paper-thin?<\/p>\n\n\n\n
As SAP conceded in a leaked 2016 memo<\/a>: \u201cCommissions are the highest risk method of engaging with partners largely because the partner\u2019s role in the deal is usually not transparent. It is possible the customer may not even know the partner was involved, which would make the likelihood that the partner performed legitimate, value add services unlikely.\u201d<\/p>\n\n\n\n
<\/a><\/figure>\n\n\n\n
<\/p>\n\n\n\n
As a result, business development partners \u201ccould hide entirely behind the scenes \u2013 unknown to competitors or the end customer as having participated in the deal. Therefore, this model is subject to abuse and is most often at the centre of corruption cases you may read about globally.\u201d<\/p>\n\n\n\n
But what SAP admits to internally is different to what it is willing to say in the public domain.<\/p>\n\n\n\n
SAP goes dark<\/h5>\n\n\n\n