Hot from Bloomberg, SAP AG, the world’s largest maker of business-management software, has came clean and admitted it made “inappropriate” downloads of Oracle’s documents, in response to a lawsuit that claims it stole files belonging to Oracle.

SAP CEO Henning Kagermann said on a conference call today:

“We regret very much that this occurred. Even a single inappropriate download is unacceptable.”

SAP shares fell 2.1 percent on the same day of the admission. Most importantly, it hurt SAP’s reputation, which has always been seen not only as a technological leader but also as a leader in issues such as compliance.

A settlement between SAP and Oracle may well cost $100 million, Credit Suisse Group analyst James Clark and colleagues wrote in a note today.

Additionally, according to Frankfurt Trust analyst Matthias Maus, this case might well last years yet.

The entire case in question centers around TomorrowNow, which SAP acquired in 2004 as part of its Safe Passage program designed to take customers from companies that Oracle bought, including PeopleSoft Inc. and J.D. Edwards.

TomorrowNow, which provides software support to clients, was authorized to download materials from Oracle’s Web site on behalf of TomorrowNow customers. The unit made “some inappropriate” downloads of fixes and support documents, SAP says; this forms the crux of the entire case.

TomorrowNow is losing business because of the lawsuit — at least one Fortune 200 business has decided that it does not want to deal with TomorrowNow due to the impending lawsuit.

This might be a case in which an individual overzealous project manager or even lay staff overstepped their authority (as well as company policy) and downloaded materials they are not legally entitled to. Perhaps it was done in the mistaken belief that their access of the said documents would not possibly be traced back to them.

Whatever the background, it remains to be seen how the whole lawsuit will play out, including the long-term repercussions of the whole matter.

Have you witnessed a situation in which the action of a single staff adversely affected the entire company? Why not share with us here? Join the discussion.