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Ericsson guilty of federal bribery, will pay $206m fine

The telco giant violated an agreement with the US DoJ by not disclosing all its evidence of misconduct

Ericsson has pleaded guilty to international bribery and will pay a $206 million (approximately £171.8 million) fine after breaching a 2019 deferred prosecution agreement (DPA) it had agreed with the US Department of Justice (DoJ).

The telcoms giant was found to have withheld evidence involving misconduct in a number of foreign states, and failed to provide prompt and sufficient information regarding misconduct in Iraq that could have violated the Foreign Corrupt Practices Act (FCPA).

In 2019 the company settled with the DoJ after admitting it had bribed officials in China, Djibouti, Indonesia, Kuwait, and Vietnam between 2000 and 2016, in violation of the FCPA. It paid a $520 million (£433 million) penalty to the US Department of Justice (DoJ) and entered into the DPA. 

The firm paid government officials tens of millions of dollars through consulting firms and third-party agents in order to score lucrative contracts, and sought to cover these up by falsifying its records and intentionally keeping poor accounts of certain international operations.

Money was funnelled into slush funds and spent on expensive trips for officials.

In paying the fine, Ericsson will remove its right to cooperation credit with the DoJ. It can now be freely prosecuted and will have to serve a probation term until June 2024.

Ericsson had agreed to allow an independent compliance monitor to check its activities for three years in 2019, and this period will now be extended by one year.

“Ericsson engaged in significant FCPA violations and made an agreement with the Department of Justice to clean up its act,” said US Attorney Damian Williams.

“The company’s breach of its obligations under the DPA indicates that Ericsson did not learn its lesson, and it is now facing a steep price for its continued missteps."

No further charges have been raised against Ericsson since the 2019 settlement, and the company has stated that it is committed to the continued transformation of its board.

“Taking this step today means that the matter of the breaches is now resolved,” said Börje Ekholm, CEO at Ericsson, in a statement.

“This 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. This resolution is a stark reminder of the historical misconduct that led to the DPA. We have learned from that and we are on an important journey to transform our culture. 

“To be a true industry leader, we must be a market and technology leader while also being a leader in how we conduct our business. The Ericsson Executive Team and I remain committed to this transformation and we continue to implement stringent controls and improved governance, ethics and compliance across our company, with corresponding enhancements to our risk management approach. The change continues and we are a very different company today and have made important changes since 2017 and over 2022.”

In 2019, it was reported that Ericsson could pay up to $1 billion (£830 million) in combined fines to the DoJ and SEC.

In April 2022, Peter Laurin, a senior vice president at Ericsson resigned amidst allegations that the company paid Islamic State as part of wider bribery in Iraq. His resignation followed a revolt by shareholders, who quelled a motion to grant a discharge to the company’s board members and therefore release them from liability for the events.

In its statement on the guilty plea, Ericsson stated that it will continue to investigate the facts surrounding its conduct in Iraq alongside the DoJ and Securities and Exchange Commission (SEC). It denies allegations that it 

IT Pro has reached out to Ericsson for a statement.

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