Ericsson to pay $206 million fine, plead guilty to bribery violations

Ericsson recently announced it 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 the anti-bribery provisions of the Foreign Corrupt Practices Act, or FCPA, US prosecutors announced Thursday evening.

Ericsson had already paid a $520.6 million fine in 2019 for what New York federal prosecutors said was a “years-long campaign of corruption” bribing government officials and falsifying books and documents in Djibouti, China, Vietnam, Indonesia , and Kuwait. In addition, the company paid approximately $540 million to the Securities and Exchange Commission.

As a result of 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 Ericsson has breached the agreement by not truthfully disclosing “all factual information and evidence” regarding the company’s plans in Djibouti and China, the Justice Department said. The company also would not have disclosed any possible evidence of a similar plan in Iraq.

Ericsson used outside consultants to pay bribes to government officials and manage off-the-book “slush funds” in all five countries, prosecutors said. violated Deferred Prosecution Agreement.

Ericsson employees in China ensured that “tens of millions of dollars” were paid to agents and advisers, “at least a portion of which was used to provide things of value, including vacation travel and entertainment, to foreign officials,” including at a telecommunications company state-owned, according to the DOJ.

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

“When the department offered Ericsson the opportunity to enter into a DPA to resolve an investigation of serious FCPA violations, the company agreed to comply with all provisions of that agreement,” said assistant attorney. General Kenneth Polite in a press release. “Instead of honoring that commitment, Ericsson has repeatedly failed to fully cooperate and disclose evidence and allegations of misconduct in violation of the agreement.”

Ericsson CEO Börje Ekholm said in a press release that with the latest punitive and plea agreement “the issue of the breaches has now been resolved.”

“This allows us to focus on executing our strategy while driving ongoing cultural change across the company, putting integrity at the heart of everything we do,” said Ekholm, who became CEO in 2017. “This resolution is a clear reminder of the historic misconduct that led to the GBA.”

The International Consortium of Investigative Journalists reported in 2022 that Ericsson reportedly “asked for permission” from ISIS to continue his work in Mosul, Iraq, which was controlled by the terrorist group at the time. The federal prosecutors’ release did not refer directly to ICIJ’s reporting on Ericsson’s alleged dealings with the so-called Islamic State, but noted that Ericsson “failed to promptly report evidence and allegations of conduct related to his business activities in Iraq and to disclose that may constitute a violation of the FCPA.”

In a press release, Ericsson said its own internal investigation “has not concluded that Ericsson made any payments or was responsible for any payment to a terrorist organization.” A subsequent 2022 study 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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