US prosecutors announced that Swedish telecom giant Ericsson had agreed to pay a fine of $206 million and admitted to violating the anti-bribery provisions of the Foreign Corrupt Practices Act. This follows a settlement agreement reached in 2019, where the company paid a fine of $520.6 million and signed a deferred prosecution agreement (DPA) with the US Attorney’s Office for the Southern District of New York.
Violation of the Deferred Prosecution Agreement
The US Department of Justice (DOJ) said Ericsson violated the agreement by failing to disclose "all factual information and evidence" involving the company's bribery scheme in Djibouti and other countries, as well as potential evidence of a similar program in Iraq. The DOJ also accused Ericsson of using external consultants to bribe government officials, managing off-book "bribe funds," and using "bogus contracts" and "bogus invoices" to conceal the nature of the funds.
Bribery Schemes and Fines
In Djibouti, an Ericsson employee paid more than $2 million in bribes to senior government officials in the country's executive branch and Djibouti's state-owned telecommunications company. Ericsson employees in China paid agents and consultants "tens of millions of dollars," "at least some of which were used to provide foreign officials with things of value, including leisure travel and entertainment." In addition to the $206 million fine, Ericsson paid a fine of about $540 million to the US Securities and Exchange Commission in 2019.
Ericsson CEO's Statement
Ericsson CEO Börje Ekholm said in a press release that the company's latest fine and plea deal resolved the breach. He added that the company can now focus on executing its strategy while driving cultural change across the company that puts integrity at the center of everything it does.
ICIJ Report on Ericsson's Alleged Dealings with ISIS
In 2022, the International Consortium of Investigative Journalists (ICIJ) reported that Ericsson allegedly sought approval from the terrorist group Islamic State (ISIS) to continue its work in Mosul, Iraq. The press release issued by US attorneys did not directly address the ICIJ report on Ericsson's alleged dealings with ISIS but noted that Ericsson "failed to report and disclose in a timely manner evidence and allegations related to its business activities in Iraq that may have violated the Foreign Corrupt Practices Act." Ericsson said in a release that its internal investigation "did not conclude that Ericsson made or was responsible for any payments to any terrorist organization." Subsequent investigations starting in 2022 did not change that assessment, the company said.
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