Ericsson to pay $206 million fine and plead guilty to bribery charges

Ericsson recently announced plans to cut 8,500 jobs as part of its cost-cutting measures.

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Swedish telecommunications giant Ericsson agreed to pay a $206 million fine and pleaded guilty to violating anti-corruption provisions of the Foreign Corrupt Practices Act, U.S. prosecutors said late Thursday.

Ericsson previously paid a $520.6 million fine in 2019 for what federal prosecutors in New York called a “year-long bribery campaign,” involving the bribery of officials and the falsification of books and records. registries in Djibouti, China, Vietnam, Indonesia and Kuwait. Additionally, the company has paid approximately $540 million to the Securities and Exchange Commission.

Following the 2019 settlement, the company entered into a Deferred Prosecution Agreement (DPA) with the U.S. Attorney’s Office for the Southern District of New York. But the Justice Department said Ericsson breached the agreement by failing to honestly disclose “all factual information and evidence” about the company’s schemes in Djibouti and China. The company also reportedly failed to disclose possible evidence of a similar scheme in Iraq.

Ericsson used outside consultants to bribe government officials and run ‘slush funds’ in the five countries, prosecutors said, using ‘fictitious contracts’ and ‘false invoices’ to obscure the nature of the funds, according to this deferred prosecution agreement.

Ericsson employees in China have paid ‘tens of millions of dollars’ to agents and consultants, ‘of which at least some was used to provide things of value, including leisure travel and entertainment , to foreign officials,” including a state-owned telecommunications company, the DOJ said.

In Djibouti, the Justice Ministry said an Ericsson employee paid more than $2 million in bribes to senior officials in the country’s executive branch and to Djibouti’s state-owned telecommunications company.

“When the Department provided Ericsson with the opportunity to enter into a DPA to resolve an investigation of serious FCPA violations, the company agreed to abide by all terms of that agreement,” Assistant Attorney General Kenneth Polite said in a statement. A press release. “Instead of honoring this commitment, Ericsson has repeatedly refused to cooperate fully and to disclose evidence and allegations of misconduct in violation of the agreement.”

Ericsson CEO Börje Ekholm said in a press release that with the latest sanctions and plea agreement, “the issue of violations is now resolved.”

“It allows us to focus on executing our strategy while driving continued cultural change across the company with integrity at the center of everything we do,” said Ekholm, who became CEO in 2017. “This resolution is a stark reminder of the historical misconduct that leads to the DPA.”

The International Consortium of Investigative Journalists reported in 2022 that Ericsson allegedly “asked permission” from ISIS to continue working in Mosul, Iraq, which was then controlled by the terror group. Federal prosecutors’ release did not directly reference ICIJ reports of Ericsson’s alleged relationship with the so-called Islamic State, but noted that the company “failed to report and promptly disclose evidence and allegations of conduct related to his business activities in Iraq that may constitute a violation of the FCPA.”

In a statement, Ericsson said its own internal investigation “did not conclude that Ericsson made or was responsible for any payment to a terrorist organization.” A subsequent 2022 investigation did not change that assessment, the company said.

An Ericsson spokesperson, when asked for comment, pointed CNBC to the company’s statement.

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