(Bloomberg) — U.S. prosecutors are broadening their investigation into possible price-fixing by German software maker SAP SE and tech reseller Carahsoft Technology Corp., in an effort to probe the companies’ work with nearly 100 government agencies, according to new court records showing the scope of research is much larger than previously known.
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The Justice Department has sent Carahsoft a legal request for documents and information on 94 civilian government agencies with which it has done business for SAP products, according to a document filed Tuesday in Baltimore federal court. In it, the company characterized the plaintiffs’ demand as a “dramatic expansion” of a civil investigation that was already examining whether the companies overcharged the military and some other parts of the government for the purchase of SAP technology worth more than $2 billion since 2014.
The expanded scope of the investigation within the U.S. government, which has not previously been reported, highlights the legal risk it poses to a top technology supplier and Germany’s most valuable company. Many investigations end without any formal allegations of misconduct.
An SAP spokesperson, Joellen Perry, said the company and its U.S.-based unit, SAP National Security Services, Inc., each received document requests from the Justice Department in August 2022 and cooperated with the civil investigation. The demands were “broad and seek documents relating to bidding and pricing practices by SAP and its resellers (including Carahsoft), but the information SAP has produced to date has been more narrowly focused,” Perry said.
An attorney for Carahsoft, William Lawler III, declined to comment. On Tuesday, Lawler asked a judge to seal the documents detailing the extensive scope of the civil investigation, saying it contained “several unsupported substantive allegations about Carahsoft and its business partners.”
A spokesperson for the Ministry of Justice also declined to comment.
In June 2022, the Justice Department demanded information from Carahsoft about whether the company and SAP overcharged the U.S. government by making false statements to the Defense Department, court documents show. Investigators later asked Carahsoft to hand over records from the Department of Agriculture, the Department of Labor, the Office of Personnel Management and the Centers for Disease Control and Prevention, Lawler wrote in Tuesday’s lawsuit. The company declined because doing so would cause it to miss a deadline to produce the other plates, he said.
Prosecutors responded in July by sending Carahsoft another information request, expanding the investigation to “the entire U.S. government for SAP products or services through SAP or resellers,” Lawler told the court. The demand covered 94 agencies, he said, and Carahsoft tried unsuccessfully to get prosecutors to limit the demand.
Last week, FBI and Department of Defense investigators searched Carahsoft’s Virginia office. Bloomberg News also reported the Justice Department’s civil investigation last week.
It is not clear whether the FBI’s search is related to the civil investigation involving Carahsoft and SAP. A spokesperson for SAP previously said the company is not involved in any criminal investigation related to Carahsoft and has no information about “the latest events” regarding its supplier.
A Carahsoft spokesperson, Mary Lange, described the search as “an investigation into a company that Carahsoft has done business with in the past” and said the company was cooperating with the FBI investigation.
The expanded scope of the civil case became public in a lawsuit that prosecutors filed against Carahsoft in 2023 over the company’s handling of the government’s demand for documents the year before. In their recent filing, prosecutors wrote that the company “continues its long pattern of delay and noncompliance.”
The Justice Department investigation fell under the False Claims Act, which allows the government to recover as much as three times the damages plus a fine. However, lawsuits are often settled for lower amounts.
Under both U.S. and German law, companies must disclose investigations if the estimated impact on their operations is material and likely to significantly affect their stock price.
SAP spokesman Daniel Reinhardt said last week that the German company follows the rules around disclosing legal risks and that based on “the current circumstances there was and remains no obligation to report on the individual case.”
Prosecutors looking into the SAP sale are also investigating the role of other companies, including a unit of the giant management and technology consulting firm Accenture. An Accenture spokesperson previously said the company is cooperating with federal investigators. The company said in regulatory filings that Accenture Federal Services made a voluntary disclosure to the U.S. government, which led to a civil and criminal investigation into whether one or more employees made inaccurate statements to the government about the company’s offering company.
It is not clear whether that investigation is related to the civil investigation into Carahsoft and SAP.
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