Exclusive: SAP says executive resigns amid Gulf region sales probe

DUBAI/LONDON (Reuters) - SAP (SAPG.DE) is investigating sales practices in its Gulf region after executives in charge of its dealings in the region resigned or been put on administrative leave, the German business software giant said on Wednesday.

SAP operates in more than 180 countries, selling business planning software that many of the world’s top multinationals rely on to manage their far-flung business operations. It is a big supplier of corporate compliance software.

A source familiar with the matter said the departures in the Gulf region were connected to dealings in Iran but provided no further details.

SAP declined to name the officials but said that one executive in the region had resigned last Saturday and another had been put on administrative leave.

“We are currently investigating business activities in the region,” the company told Reuters in a statement, without specifying whether the matter concerned Iran.

“SAP is committed to the highest standards of business ethics and we always strive to operate with transparency and integrity. Please understand that we cannot say more while the investigation is ongoing,” the company said.

GLOBAL COMPLIANCE CRACKDOWN

Last month SAP promised to make sweeping changes to its sales practices around the world after the company revealed it was the subject of a U.S. corruption probe tied to its South African business (reut.rs/2jNUIey) (reut.rs/2z8By9x).

A spokesman declined to comment on whether the issues in the Gulf had arisen after the company put in place additional compliance and due diligence controls worldwide on the use of sales agents and resellers to win SAP contracts.

In April, SAP warned customers and sales partners that U.S. sanctions continued to restrict its dealings with Iran and the sale of the company’s software there.

Despite the lifting of some sanctions by the European Union and the United States in early 2016 following the multinational nuclear deal, severe penalties could result from violating the remaining U.S. sanctions, the company said.

In October an SAP board member told Reuters that an internal probe by the company had found faults in its compliance and due diligence controls on how it conducts sales in South Africa and in other countries.

In response, SAP said it had stopped paying sales commissions on all public sector deals in nations where risks of corruption in government contract awards were deemed to remain high, including Brazil, China, India, Russia, Mexico, Iran and South Africa.

Last year SAP was fined $3.9 million by U.S. securities regulators for failing to maintain internal controls to prevent a bribery scheme by a former sales executive who won lucrative contracts from the Panamanian government (reut.rs/2vcPOIp).

(This version of the story was refiled to modify headline)