Earlier this month, news broke of what some shadiness in the dealings between SAP South Africa, CAD house and Transnet.
Gareth van Zyl wrote extensively on the red flagged dealings between SAP (SA), CAD house and Transnet in a piece on biznews.com titled #JoiningTheDots: Reading between the lines of SAP’s Gupta defensiveness.
While I cannot comment specifically on this case, it seems to be suggested that kick-backs to various organizations are par for the course in business dealings in South Africa at the moment, particularly for high value and high profile deals.
While 'introducer' and 'referral' fees are nothing new in the software and services industry, they are the subject of a great deal of concern when the best deals are not being brokered. Such goings-on would worry not only the customer, but also competitors and the whole process of 'deal' transparency.
The expose dates back to a deal from August 2015, where SAP (SA) agreed to pay a 10% “sales commission” to Gupta-linked CAD House in return for Transnet deals.
Van Zyl describes it as having many "Red flags" - the success fee is described as above the industry norm of 2-3% and particularly since CAD House are specialists in 3D printing and not in SAP or ERP projects.
Investigative journalism site AmaBhungane reported that almost R100M in SAP payments flowed to CAD house despite it being surrounded by questionable activities as a whole.
Just as SAP is caught up in the regional politics, graft charges and scandals of South Africa, so too is analyst firm McKinsey which found itself tied to similar "Gupta-linked" deals. Unlike McKinsey, SAP chose to take a more defensive position on the dealings. It seems though that the SA leadership of SAP is in for a change though. Watch this space!