Swedish telecommunications giant Ericsson has agreed to pay a fine of $206 million (1.425 RMB billion) and admitted to violating the anti-bribery provisions of the Foreign Corrupt Practices Act, U.S. prosecutors announced Thursday evening.
Ericsson originally reached a settlement with the U.S. in 2019, entering into a deferred prosecution agreement (DPA) with the U.S. Attorney’s Office for the Southern District of New York and paying a fine of $520.6 million (currently about RMB 3.597 billion). At the time, federal prosecutors in New York said Ericsson participated in a “years-long corruption campaign” involving bribing government officials in Djibouti, Vietnam, Indonesia and Kuwait, and falsifying books and records. In addition, the company paid a fine of about $540 million (currently about RMB 3.731 billion) to the U.S. Securities and Exchange Commission.
However, the U.S. Department of Justice said Ericsson violated the agreement by failing to truthfully disclose “all factual information and evidence” related to the company’s bribery schemes in Djibouti and elsewhere. The company also failed to disclose potential evidence of a similar scheme in Iraq.
U.S. prosecutors said Ericsson violated the deferred prosecution agreement by using outside consultants to pay bribes to government officials in all of the various countries and by managing off-the-books “slush funds” that used “false contracts” and “false invoices “to conceal the nature of the funds. The U.S. Department of Justice said that Ericsson employees in China paid “tens of millions of dollars” to agents and consultants, “at least some of which was used to provide foreign officials with things of value, including leisure travel and entertainment. In Djibouti, 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 of Justice offered Ericsson the opportunity to sign a DPA to resolve an investigation into serious violations of the Foreign Corrupt Practices Act, the company agreed to comply with all of the terms of the agreement,” Assistant U.S. Attorney Kenneth Polite said in a press release. However, Ericsson has failed to honor this commitment by repeatedly refusing to cooperate fully and failing to disclose evidence and allegations of misconduct in violation of the agreement.”
Ericsson CEO Börje Ekholm said in a press release that with the company’s latest fine and plea agreement, “the breach has now been resolved.” “This allows us to focus on executing our strategy while driving continued culture change across the company, putting integrity at the center of what we do,” said Börje Ekholm, adding that “this resolution is a clear reminder of the historical misconduct that led to the creation of the DPA. “
In 2022, the International Consortium of Investigative Journalists (ICIJ) reported that Ericsson allegedly “sought approval” from the terrorist group Islamic State (ISIS) to continue its work in Mosul, Iraq. Mosul was controlled by ISIS at the time. The U.S. Attorney’s press release does not directly address the ICIJ report on Ericsson’s alleged dealings with ISIS but states that Ericsson “failed to timely report and disclose evidence and allegations related to its business activities in Iraq, which may have violated the Foreign Corrupt Practices Act.
Ericsson said in a press release that its internal investigation “did not conclude that Ericsson made, or was responsible for, any payments to any terrorist organization. The company said a subsequent investigation beginning in 2022 did not change that assessment.