Ericsson recently announced plans to cut 8,500 jobs as part of its cost-cutting efforts.
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Swedish telecoms giant Ericsson agreed to pay a $206 million fine and pleaded guilty to violating the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA), US prosecutors said on Thursday evening with.
Ericsson had previously paid a $520.6 million fine in 2019 over what New York federal prosecutors said was “years-long campaign of corruption” involving bribery of government officials and falsification of books and records 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 US Attorney’s Office for the Southern District of New York. But Ericsson violated the agreement by not truthfully disclosing “all factual information and evidence” concerning the company’s plans in Djibouti and China, the Justice Department said. The company also allegedly failed to disclose possible evidence of a similar system in Iraq.
Ericsson used outside consultants to pay bribes to government officials and manage “slush funds” in all five countries, prosecutors said, using “bogus contracts” and “fake invoices” to disguise the nature of the funds, they said violate the Deferred Prosecution Agreement.
Ericsson employees in China arranged for the disbursement 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,” including at a state-owned telecommunications company, the said DOJ.
In Djibouti, the Justice Department said 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.
“When the Department offered Ericsson an opportunity to enter into a DPA to resolve an investigation into serious FCPA violations, the company agreed to comply with all of the terms of this agreement,” Assistant Attorney General Kenneth Polite said in a press release. “Instead of honoring that obligation, Ericsson has repeatedly failed to fully cooperate and disclose evidence and allegations of wrongdoing in violation of the Agreement.”
Ericsson CEO Börje Ekholm said in a press release that with the latest penalty and defense agreement, “the matter of the violations is now resolved.”
“This allows us to focus on executing our strategy while driving cultural change across the business, with integrity at the core of everything we do,” said Ekholm, who became CEO in 2017 and led the DPA.”
The International Consortium of Investigative Journalists reported in 2022 that Ericsson allegedly “requested” permission from IS to continue work in Mosul, Iraq, then controlled by the terrorist group. Federal prosecutors’ release was not directly related to the ICIJ’s reporting of Ericsson’s alleged dealings with the so-called Islamic State, but it did note that Ericsson “failed to promptly report and disclose evidence and allegations of conduct related to its business activities in Iraq.” a violation of the FCPA.”
In a press release, Ericsson said its own internal investigation “did not conclude that Ericsson made or was responsible for payments to a terrorist organization.” A subsequent investigation from 2022 does not change this assessment, the company said.
A spokesman for Ericsson referred CNBC to the company’s statement when asked for comment.
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