US Department of Justice orders Ericsson to pay $1bn fine to settle bribery case

Ericsson has agreed to pay the US Department of Justice (DOJ) $1.06bn to resolve an investigation into violations of the US Foreign Corrupt Practices Act (FCPA).

The DOJ said the case arose from an Ericsson scheme to make and improperly record tens of millions of dollars in improper payments around the world.

In the Southern District of New York on 6 December 2019, the DOJ charged Ericsson, and specifically its Egyptian subsidiary, with conspiracies to violate the anti-bribery, books and records, and internal controls provisions of the FCPA. Ericsson Egypt entered into a deferred prosecution agreement with the DOJ, pleading guilty.

In the agreement, Ericsson has committed to pay a criminal penalty of more than $520m and about $540m to be paid to the US Securities and Exchange Commission (SEC) in a related matter. The latter resolved claims related to allegations of violations of the accounting provisions of the FCPA in China, Djibouti, Indonesia, Kuwait, Saudi Arabia and Vietnam and of the bribery provisions of the FCPA in Djibouti, China and Saudi Arabia.

Condemning Ericsson’s actions as corrupt, and commenting on the judgment and what it meant to business in general, Assistant Attorney General Brian A Benczkowski of the Justice Department’s Criminal Division said: “Ericsson’s corrupt conduct involved high-level executives and spanned 17 years and at least five countries, all in a misguided effort to increase profits.

“Such wrongdoing called for a strong response from law enforcement, and through a tenacious effort with our partners in the Southern District of New York, the SEC, and the IRS, today’s action not only holds Ericsson accountable for these schemes, but should deter other companies from engaging in similar criminal conduct.”

US Attorney Geoffrey S Berman of the Southern District of New York added: “Ericsson has admitted to a years-long campaign of corruption in five countries to solidify its grip on telecommunications business. Through slush funds, bribes, gifts and graft, Ericsson conducted telecom business with the guiding principle that ‘money talks’. Today’s guilty plea and surrender of over a billion dollars in combined penalties should communicate clearly to all corporate actors that doing business this way will not be tolerated.”

Ericsson fully accepted the court’s decision and described its actions as “failings”. It said it was working on enhancing its internal controls and its compliance programme to ensure no repetitions. “I am upset by these past failings,” said president and CEO Börje Ekholm.“Reaching a resolution with the US authorities allows us to close this legacy chapter.

“The settlement with the SEC and DOJ shows that we have not always met our standards in doing business the right way. This episode shows the importance of fact-based decision-making and a culture that supports speaking up and confronting issues. We have worked tirelessly to implement a robust compliance programme. This work will never stop.”