Ericsson Agrees To Pay $206 Million Penalty For Bribery Violations In The U.S.

U.S. authorities announced Thursday night that Swedish telecom firm Ericsson had admitted guilt and agreed to pay a $206 million fine for breaking the Foreign Corrupt Practices Act's anti-bribery provisions.

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According to New York federal authorities, Ericsson previously paid a $520.6 million fine in 2019 for what they called a "years-long campaign of corruption" that involved the bribery of public servants and the fabrication of books and records in Djibouti, China, Vietnam, Indonesia, and Kuwait. The business also made a $540 million payment to the Securities and Exchange Commission.

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The business and the U.S. agreed into a deferred prosecution agreement (DPA) as a result of the 2019 settlement. Attorney's Office for New York's Southern District. But, according to the Department of Justice, Ericsson broke the terms of the agreement by withholding "all factual information and evidence" pertaining to its activities in Djibouti and China. The business is also accused of concealing potential proof of a similar scam in Iraq.

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In accordance with that deferred prosecution agreement, prosecutors claimed that Ericsson used outside consultants to manage "slush funds" and pay bribes to government officials in all five countries. To hide the true nature of the funds, "sham contracts" and "false invoices" were used, according to the prosecutors.

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Employees of Ericsson in China allegedly ordered the payment of "tens of millions of dollars" to agents and consultants, "at least a portion of which was used to provide things of value, including leisure travel and entertainment to foreign officials," according to the DOJ. This included work at a state-owned telecommunications firm.

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The Djiboutian executive branch and the state-owned telecommunications company were among the high-ranking government officials that received bribe payments totaling over $2 million from an employee of Ericsson, according to the Justice Department.

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In a news release, Assistant Attorney General Kenneth Polite stated that when the Department gave Ericsson the chance to enter into a DPA to end an investigation into major FCPA offenses, the firm agreed to abide by all of its terms. Ericsson "repeatedly failed to fully comply and failed to provide evidence and claims of misbehavior in violation of the agreement" instead of keeping their word.

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According to a press release from Ericsson, "the matter of the breaches is now ended" with the most recent penalty and plea deal.

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This enables us to concentrate on implementing our plan while fostering ongoing cultural transformation throughout the organization, with integrity at the core of all we do, said Ekholm, who took over as CEO in 2017. "The historical wrongdoing that resulted in the DPA is starkly brought to light by this resolution."

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According to a 2022 investigation by the International Consortium of Investigative Journalists, Ericsson allegedly "ought permission" from ISIS to carry on with its work in Mosul, Iraq, which at the time was under their control. Although the ICIJ's reporting on Ericsson's alleged dealings with the so-called Islamic State was not specifically mentioned in the federal prosecutors' statement, it was noted that the company "failed to promptly report and disclose evidence and allegations of conduct related to its business activities in Iraq that may constitute a violation of the FCPA."

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The firm claimed in a release that its own internal inquiry "did not determine that Ericsson made or was accountable for any contributions to any terrorist organization" and that a second probe from 2022 did not alter that conclusion.

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When prompted for response, an Ericsson representative directed Trade Algo to the company's statement.