SAP SE (“SAP”) was a European Union corporation headquartered in Waldorf, Germany. SAP’s American Depositary Shares were registered with the SEC pursuant and listed on the New York Stock Exchange. SAP markets its software all over the world through various country subsidiaries.
Vicente E. Garcia was a U.S. citizen and SAP’s Vice President of Global and Strategic Accounts, responsible for sales in Latin America for SAP from February 2008 until April 2014, when SAP terminated Garcia for his misconduct described herein. Although Garcia was technically employed by SAP International, Inc. ("SAPI"), SAP's wholly-owned Brazilian subsidiary, SAP presented him to customers as an SAP employee and his supervisors included employees of SAPI.
Between at least June 2009 to November 2013, Garcia discounted the price of SAP software to a former SAP local partner at a level sufficient to permit Garcia and the local partner to pay $145,000 in bribes to one senior Panamanian government official, and offer bribes to two others. Through these bribes, Garcia secured government sales contracts of approximately $3.7 million for SAP, and also self-profited through kickbacks. By excessively discounting the SAP software, Garcia created a slush fund that the partner used to pay the bribes and kickbacks. Garcia concealed his scheme from others at SAP, circumvented SAP’s internal controls, and justified the excessive discounts by falsifying SAP’s internal approval forms. The deep discounts that Garcia used to create the slush fund were falsely recorded as legitimate discounts on the books of SAP Mexico S.A. de C.V., SAP’s Mexican subsidiary, which were subsequently consolidated into SAP’s financial statements.
In an administrative proceeding on February 1, 2016, the SEC ordered SAP to cease and desist violating the books & records and internal controls provisions of the FCPA. Without admitting or denying responsibility, SAP agreed to the order and to pay disgorgement of $3.7 million plus prejudgment interest of $188,896.
In related proceedings, the SEC also issued a Cease and Desist Order against Garcia on August 12, 2015, and the DOJ filed a single count Information in the Northern District of California against Garcia alleging conspiracy to violate the anti-bribery provisions of the FCPA on July 13, 2015.
Under the terms of the cease and desist order, the SEC ordered Garcia to stop violating the anti-bribery, books & records, and internal controls provisions of the FCPA and required Garcia to disgorge $85,965, representing the kickback Garcia received in connection with the bribery scheme, plus prejudgment interest of $6,430.
On August 12, 2015, Garcia pleaded guilty to the DOJ charge. On December 16, 2015, the court sentenced Garcia to 22 months in prison to be followed by 3 years of supervised release and ordered him to pay a mandatory assessment of $100. The fine was waived.
