SAP Sap SE

By Aruna Viswanatha 

WASHINGTON -- Software company SAP SE admitted it provided millions of dollars in software to Iran in violation of U.S. sanctions, becoming the first company to benefit from a Justice Department program that encourages companies to self-report criminal export violations in exchange for leniency, U.S. authorities said Thursday.

Between 2010 and 2017, the German enterprise-software giant sent upgrades and software patches more than 20,000 times to users in Iran, and allowed its cloud businesses to give 2,360 Iranian users access to U.S.-based cloud services, the Justice Department said.

Some senior SAP executives were aware that the company wasn't using filters to identify and block Iranian downloads, the agency said.

The company reported the issues to both regulators and criminal investigators, and cooperated in the government's investigation, authorities said. SAP agreed to pay $8 million in penalties and enter an agreement under which prosecutors won't prosecute the company in exchange for its improving compliance.

In a statement, SAP said it accepted "full responsibility for past conduct" and had enhanced its internal controls.

Since uncovering the conduct in 2017, the company has spent more than $27 million on compliance changes, including implementing new filters, deactivating thousands of users in Iran, and auditing and suspending partners who sold to Iran-affiliated customers, according to the agreement.

The head of the Justice Department's national-security division, John Demers, said that both criminal and civil penalties could have been substantially higher and that the company could have been required to plead guilty if investigators had discovered the problems themselves and the company hadn't reported them to authorities.

"It could have been far worse," Mr. Demers said.

The Justice Department has created several programs to encourage companies to report potential misconduct by its employees to help investigate complicated corporate crimes and those requiring international evidence, offering the potential for lenient treatment in exchange.

In December 2019, the agency expanded those policies and said that if a company voluntarily self-disclosed violations of U.S. export-control laws or sanctions and cooperated, it could expect to receive a so-called nonprosecution agreement under which it wouldn't face criminal charges.

The acting U.S. attorney in Boston, Nathaniel Mendell, whose office conducted the investigation, said SAP had "aggressively and quite productively" disclosed information to investigators, helping translate documents and making foreign witnesses available for government interviews.

SAP earned around $5 million from the sales to Iran from 2010 to 2017, according to the agreement. The company entered into similar agreements with civil regulators at the departments of Treasury and Commerce.

Write to Aruna Viswanatha at Aruna.Viswanatha@wsj.com

(END) Dow Jones Newswires

April 29, 2021 16:10 ET (20:10 GMT)

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