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UPDATE 1-SAP overhauls sales practices as it faces U.S. probe on S. Africa

* SAP bans commissions on govt contracts in many countries

* Confirms U.S. corruption probe on S. Africa dealings

* Takes disciplinary action against three S. Africa managers

* Apologises to country, customers, employees over scandal (Adds details on sales controls, comments, background on scandal)

LONDON, Oct 26 (Reuters) - Global business planning software giant SAP is making sweeping changes to its sales practices in countries around the world, the German company said, as it revealed it is the subject of a U.S. corruption probe tied to its South Africa business.

Adaire Fox-Martin, SAP executive board member in charge of global customer operations, told Reuters in an interview on Thursday that its on-going investigation into corrupt sales practices related to South Africa government contracts had led it to take disciplinary actions against three top managers.

South African media reported in July that SAP paid alleged kickbacks in the form of sales commissions to a firm linked to the politically connected Gupta family, who are known to be close friends of President Jacob Zuma. (reut.rs/2tnArLY)

SAP operates in more than 180 countries, selling business planning software that many of the world's top multinationals rely on to manage their far-flung business operations. It is a big supplier of corporate compliance software.

"We hope that the actions we have taken and our responsiveness... demonstrates how heartfelt this issue is for us (and) how disappointed we are that SAP has been identified with wrong-doing in this way," Fox-Martin said by phone from South Africa. "We do strive to be a company that walks the walk and talks the talk," Fox-Martin said. "We have wholeheartedly and unreservedly apologised for this activity."

Fox-Martin said an internal probe by the company had found loopholes in its compliance and due diligence controls on how it conducts sales in South Africa but other countries.

In response, SAP also said it has stopped paying sales commissions on all public sector deals in nations where risks of corruption in government contract awards remain high, including Brazil, China, India, Russia, Mexico and Italy and South Africa.

SAP said it was instituting extensive additional compliance and due diligence controls on the use of third-party sales agents and value-added resellers to win SAP software and services contracts and will conduct stepped-up audits worldwide. (Editing by Maria Sheahan)