Ericsson recently announced plans to cut 8,500 jobs as part of cost-cutting measures.
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The Swedish telecommunications giant Erickson agreed to pay a $206 million fine and plead guilty to violating anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA), the U.S. Attorney’s Office announced Thursday evening.
Ericsson already paid a $520.6 million fine in 2019 for what federal prosecutors in New York described as a “multi-year corruption scheme” that involved bribing government officials and falsifying books and records in Djibouti, China, Vietnam , Indonesia, and Kuwait. In addition, the company paid about $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 breached the agreement by failing to truthfully disclose “all factual information and evidence” related to the company’s schemes in Djibouti and China, the Justice Department said. The company also allegedly failed to disclose possible evidence of a similar scheme in Iraq.
Prosecutors said Ericsson used outside consultants to pay bribes to government officials and manage off-the-books “funds” in all five countries. violated the deferred prosecution agreement.
Ericsson employees in China facilitated the payment of “tens of millions of dollars” to agents and consultants, “at least some of which were used to provide valuables, including leisure and entertainment, to foreign officials,” including the state-owned telecommunications company , reported the Ministry of Justice.
Djibouti’s Justice Department said an Ericsson employee paid more than $2 million in bribes to high-ranking government officials in the country’s executive branch and Djibouti’s state-owned telecommunications company.
“When the Department gave Ericsson the opportunity to enter into a DPA to conduct an investigation into serious FCPA violations, the company agreed to comply with all provisions of that agreement,” Assistant Attorney General Kenneth Polite said in a news release. “Instead of complying with this obligation, Ericsson repeatedly refused to fully cooperate and failed to disclose evidence and allegations of misconduct in violation of the agreement.”
Ericsson CEO Børje Ekholm said in a press release that with the latest penalty and plea agreement, “the issue of violations is now resolved.”
“This allows us to focus on executing our strategy while ensuring lasting cultural change within the company, with integrity at the heart of everything we do,” said Ekholm, who became CEO in 2017. led to the DPA’.
In 2022, the International Consortium of Investigative Journalists reported that Ericsson allegedly “requested permission” from ISIS to continue operating in Mosul, Iraq, which was then controlled by the terrorist group. The federal prosecutors’ release did not directly refer to the ICIJ report on Ericsson’s alleged ties to the so-called Islamic State, but noted that Ericsson “failed to timely report and disclose evidence and allegations of conduct related to its business activities in Iraq that may have ‘are a violation of the FCPA.’
In a release, Ericsson said its own internal investigation “did not conclude that Ericsson made or is responsible for any payments to any terrorist organization.” A follow-up investigation in 2022 did not change that assessment, the company said.
An Ericsson representative, when asked for comment, pointed CNBC to the company’s statement.
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