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Marin County settles legal claims against Deloitte, SAP over software project

The county will reportedly net just $3.9 million in the deal and will continue using SAP's software

By Chris Kanaracus
January 11, 2013 02:30 PM ET

IDG News Service - A long-running legal dispute between Marin County, Calif., Deloitte Consulting and SAP over a troubled software project has concluded in a legal settlement this week that will reportedly net the county far less money than it had sought.

Deloitte served as a systems integrator on the project, which involved the implementation of SAP ERP (enterprise resource planning) software. SAP's Public Services arm has also been involved.

"The settlement follows the Court's dismissal of several of the County's claims, and the County's conclusion, after a full investigation, that it should voluntarily dismiss its remaining fraud claim and its allegations of improper influence of a County employee who managed the project," Deloitte and Marin said in a joint statement. "While the County remains concerned about the activities of its former employee, evidence uncovered after the complaint was filed revealed that Deloitte Consulting did not improperly influence the employee."

"Accordingly, what remained was primarily a dispute about the scope of work that Deloitte Consulting was engaged to perform," the statement added.

Ernest Culver is the employee in question. Marin County had alleged that Culver was "approving Deloitte's deficient work on the project, approving payments, and causing Marin County to enter into new contracts with Deloitte and SAP" while he was interviewing for jobs at both companies.

Marin County also alleged that Deloitte used the project as a training ground for inexperienced workers.

The settlement should not be construed as an admission of wrongdoing by either Deloitte or Marin, according to the statement.

"As a result of the litigation process, the County has determined it is in its best interests to dismiss the claims against SAP," an agreement between SAP and Marin stated. SAP also admits no liability or responsibility, it added, and Marin is still using the SAP system.

That represents a shift from the county's announcement in 2010 that it would remove and replace the SAP software with something else, due to the belief that fixing it would cost more money than an alternative.

"SAP is delighted with the outcome of this case," spokesman Andy Kendzie said in a statement. "We maintained all along this had no merit. Time after time the courts agreed with that as they threw out, or diminished, baseless allegations. We look forward to resuming a constructive working relationship with Marin County."

At one point, Marin County had sought $35 million in damages and alleged that Deloitte and SAP's alleged wrongdoing fell under the auspices of the federal RICO (Racketeer Influenced and Corrupt Organizations) Act, which would have trebled the damages. A judge ultimately tossed out the racketeering claims.

But the settlement will only provide Marin County with roughly $3.9 million, to be reimbursed from Deloitte's fees, according to a report in the Marin Independent Journal newspaper, which procured the document. County officials didn't respond to a request for a copy of the settlement on Friday, and one could not immediately be obtained from SAP and Deloitte.

The settlement's terms include a gag order preventing county officials from speaking about the case except for the joint statement, according to the newspaper.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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