Ericsson to pay $206M for breaking US deal in bribery case
Swedish telecom equipment maker Ericsson has agreed to plead guilty to U.S. foreign corruption violations and pay more than $206 million for breaking a deal with the Justice Department over charges of bribery and falsifying records in countries from China to Kuwait
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Your support makes all the difference.Swedish telecom equipment maker Ericsson has agreed to plead guilty to U.S. foreign corruption violations and pay more than $206 million for breaking a deal with the Justice Department over charges of bribery and falsifying records in countries from China to Kuwait.
The U.S. Justice Department said the company, based in Stockholm, violated a 2019 agreement by failing to provide documents and information the agency needed for its investigation and to bring charges against individuals accused of misconduct.
Ericsson, which provides equipment for high-speed 5G wireless networks, used intermediaries to bribe government officials and manage illicit stashes of cash in Djibouti, China, Vietnam, Indonesia and Kuwait, prosecutors say.
“The company’s breach of its obligations ... indicate that Ericsson did not learn its lesson, and it is now facing a steep price for its continued missteps," U.S. Attorney Damian Williams for the Southern District of New York said in a prepared statement Thursday.
Ericsson was accused of drawing up fake contracts and invoices to pay third-party agents carrying out the bribes and then not properly accounting for the payments from 2000 to 2016.
CEO Börje Ekholm says Ericsson has made important changes and is committed to enforcing strict controls and improved oversight and ethics.
“This resolution is a stark reminder of the historical misconduct" that led to the deal with the Justice Department, Ekholm said in a prepared statement. "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.”
Facing a criminal indictment in New York over violations of the Foreign Corrupt Practices Act, Ericsson in 2019 paid a $520 million penalty and agreed to have an independent compliance monitor for three years.
Now, the Justice Department says the company has failed to “truthfully disclose" all information and evidence in the Djibouti and China cases and in other potential bribery or accounting violations. Ericsson also failed to turn over details in a 2019 Iraq internal investigation that has raised allegations of illegal business behavior, the agency said.
As a result, Ericsson agreed to plead guilty to the charges put off by the 2019 deal: conspiracy to violate the foreign corruption law's anti-bribery and bookkeeping provisions.
Ericsson will pay $206.7 million, serve probation through June 2024 and keep the independent compliance monitor for another year.
It's the latest hit for the company, which said last week that it's cutting 8% of its global workforce as it looks to reduce costs.