The Commission found that Gartner violated the anti-bribery, books and records, and internal accounting control provisions of the Foreign Corrupt Practices Act of 1977 (FCPA) as a result of a scheme to obtain and retain business from a South African government entity, the South Africa Revenue Service (SARS).
Key points
- Gartner violated the anti-bribery, books and records, and internal accounting control provisions of the Foreign Corrupt Practices Act of 1977 (“FCPA”), as a result of a scheme to obtain and retain business from a South African government entity, the South Africa Revenue Service (“SARS”).
- This justification was false because Gartner, through its local sub-agents, did in fact qualify under the B-BBEE.
- Gartner did not enter into a sub-contract with the Private Company for Phase II of the SARS project.
- As described above, the Gartner Consulting Manager authorized multiple payments to the Private Company in connection with the Phase I and Phase II contracts with SARS.
- As a result, Gartner was awarded the Phase I and Phase II SARS contracts and received ill-gotten net profits associated with the contracts of $675,974.
The Gartner Consulting Manager authorized Gartner to enter into sub-contracts with a South African information technology consulting company (the “Private Company”) at the time of the sub-contracts, knowing or consciously disregarded the possibility that all or part of the money paid to the Private Company would be offered, given, or promised, directly or indirectly, to those SARS officials, in violation of their lawful duty, to award multi-million dollar sole-source contracts to Gartner.
The purported justification for hiring the Private Company was that (1) Gartner needed to sub-contract with the Private Company in order to meet the requirements of South Africa’s Broad-Based Black Economic Empowerment legislation (“B-BBEE”) and (2) neither Gartner nor its local sub-agents qualified under the applicable law. This justification was false because Gartner, through its local sub-agents, did in fact qualify under the B-BBEE.
The Gartner Consulting Manager was responsible for Gartner Consulting’s public sector business covering Europe, the Middle East, and Africa, including oversight of the SARS engagement. The Private Company was a private South African information technology consulting company formed in 2009 and was a close friend of a SARS senior official.
In April 2015, the Gartner Consulting Manager and Zimeleyo’s General Manager met with the SARS Commissioner and several top officers to discuss Gartner’s report on its completion of the service agreement (“Phase I”). The SARS Commissioner suggested a follow-up project to implement Gartner’s recommendations and asked the Gartner Consulting Manager for a rough estimate of the cost. The Gartner Consulting Manager did not question whether there was possible collusion between the Private Company and SARS officials.
SARS signed the Phase II Master Consulting Services Agreement on July 31, 2015, on a sole-source basis. The Private Company was to receive 40% of the contract, and the Commission found that the findings of the Order are not binding on any other person or entity in this or any other proceeding. The SARS Phase II contract required Gartner to meet B-BBEE qualifications and provide a “Verification Certificate” to SARS on an annual basis. Gartner did not enter into a sub-contract with the Private Company for Phase II of the SARS project, but engaged several individuals affiliated with the Private Company to conduct Phase II work on Gartner’s behalf. Gartner’s invoices omitted any reference to the participation of the Private Company, and Gartner’s policy regarding the hiring of third party consultants did not adequately address anti-corruption risks.
The Commission found that Gartner’s internal FCPA risk assessments identified the company’s sales agent, consultant, or third party relationships with public sector clients as a potential “bribery red flag.” The company lacked risk-based screening procedures for hiring third party contractors, had no anti-corruption related vendor onboarding procedures, and lacked adequate monitoring procedures.
The Commission imposed sanctions on Gartner for violating Section 30A of the Exchange Act, Section 13(b)(2)(A) of the Exchange Act, and Section 13(b)(2)(B) of the Exchange Act. Gartner’s remedial efforts included providing regular updates, sharing facts identified in the course of its own internal investigation, making foreign-based employees available for interviews in the United States, and encouraging cooperation by former employees.
The Commission ordered Gartner to cease and desist from committing or causing any violations and future violations of Sections 30A, 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. The disgorgement and prejudgment interest ordered in paragraph IV are consistent with equitable principles and do not exceed the Respondent’s net profits from its violations. The Commission deems it appropriate to impose the sanctions agreed to in Respondent Gartner’s Offer. If payment is not made, additional interest will accrue under 31 U.S.C. §3717. Payment can be made electronically, directly from a bank account via Pay.gov, or by certified check, bank cashier’s check, or United States postal money order.
Payments must be accompanied by a cover letter identifying Gartner and the file number of the proceedings. Civil money penalties ordered will be treated as penalties paid to the government for all purposes, including tax purposes. Respondent agrees not to argue that it is entitled to offset or reduce compensatory damages by the amount of a civil penalty in a Related Investor Action. If a court grants a penalty offset, Respondent agrees to notify the Commission’s counsel and pay the amount within 30 days. A Related Investor Action refers to a private damages action brought against Respondent by or on behalf of one or more investors based on substantially the same facts as alleged in the Commission’s Order.