South Africa's Court Orders Germany's SAP To Pay R500M Over 'Invalid' Eskom Contracts

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Special Tribunal has ordered the German software company SAP to pay half a billion South African rand to the Special Investigating Unit (SIU) in seven days over "invalid" Eskom contracts.

The order to pay R500 million to SIU stemmed from the validity of two Eskom contracts that SAP was awarded between 2013 and 2016, SA News reported.

Eskom and SAP entered into two contracts -- the Enabling Agreement and the Cloud Services Agreement -- worth about R1.1 billion. The Special Tribunal order has declared that the two contracts are constitutionally invalid and therefore set aside.

The government department explained that this order came as a part of "the implementation of the SIU investigation outcomes and consequence management to recover financial losses suffered by State institutions due to negligence or corruption."

The SIU - which works as an independent statutory body investigating serious allegations of corruption, malpractice and maladministration - explained that an investigation into Eskom showed that the contracts were not legal.

"SAP entered into a Sale Commission Agreement with CAD House CC, a Gupta-linked company. Furthermore, Eskom and SAP signed an agreement for Cloud services at a contract value of R21 712 514.82. Following payments from Eskom to SAP, CAD House received funds from SAP," the unit said.

The department also clarified that this settlement agreement does not mean that any involved party including SAP won't get prosecuted in the future.

It added, "SIU findings revealed that the Enabling Agreement and the Cloud Services Agreement did not comply with the Public Finance Management Act, which resulted in Eskom incurring fruitless and wasteful expenditures in respect of the agreements."

The department said that it has the authority to take legal action in the High Court or a Special Tribunal to address wrongdoing resulting from corruption, fraud or mismanagement found during its investigations.

According to the Special Investigating Units and Special Tribunals Act 74 of 1996, if the SIU finds evidence of criminal behavior, it forwards it to the National Prosecuting Authority for further action.