Ericsson has spoiled its chance to make good on its anti-corruption promises to US prosecutors.
The Stockholm-based multinational telecommunications firm has agreed to plead guilty and pay a fine of more than $206 million after breaching a 2019 Deferred Prosecution Agreement (DPA) by violating the agreement’s cooperation and disclosure provisions, the US Securities and Exchange Commission (SEC) said yesterday (Mar. 2).
In 2019, Ericsson had entered into the DPA to resolve previously disclosed Foreign Corrupt Practices Act (FCPA) violations relating to conduct in several countries between 2000 and 2016. The company was accused of “paying bribes, falsifying books and records, and failing to implement reasonable internal accounting controls,” according to the SEC. (There is no new criminal or illegal misconduct that has been tacked on since.)
In a deferred prosecution agreement, prosecutors charge a company but agree to drop those charges after a period of time if the company abides by certain conditions. If it doesn’t, though, US prosecutors can scrap the deal and proceed with the charges.
US attorney Damian Williams for the Southern District of New York found that Ericsson did not make good on its word to promptly collaborate with authorities. “The company’s breach of its obligations under the DPA indicate that Ericsson did not learn its lesson, and it is now facing a steep price for its continued missteps.”
As a consequence of the DPA violation, the company pleaded guilty to one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of conspiracy to violate the internal controls and books and records provisions of the FCPA.
A brief timeline of Ericsson’s DPA violations
Dec. 2019: Ericsson enters DPA with the SEC after the federal agency charges it with running “a large-scale bribery scheme involving the use of sham consultants to secretly funnel money to government officials in multiple countries,” which netted the firm millions of dollars in profits in Saudi Arabia, China, Djibouti, Vietnam, Indonesia, Kuwait, and other countries, from 2011 through 2017. The company agrees to pay $1 billion to settle the case.
Also in 2019: Ericsson starts internally investigating misconduct in Iraq and finds no employee made or was responsible for any payments to any terrorist organization. This conclusion stands three years later, in 2022, as well.
Oct. 2021: DOJ says Ericsson breached its obligations under the DPA “by failing to provide certain documents and factual information” relating to, among other things, a 2019 Iraq-related internal investigation.
Mar. 2022: DOJ once again notifies Ericsson that the company has failed to provide documents and information to the DOJ in a timely manner.
Ericsson’s foreign corruption, by the digits
Tens of millions of dollars: Money paid out to agents and consultants by Ericsson employees in China, “at least a portion of which was used to provide things of value, including leisure travel and entertainment, to foreign official”
$2.1 million: How much Ericsson paid in bribes to high-ranking government officials in Djibouti
$4.8 million: Payments made in Vietnam
$45 million: Payments made in Indonesia
$450,000: Payment made in Kuwait
$206,728,848: Criminal penalty to be paid for violating the 2019 agreement
One more year: Extension of the independent compliance monitor, ordered by the SEC
Quotable: A learning lesson for Ericsson
“Taking this step today means that the matter of the breaches is now resolved. This allows us to focus on executing our strategy while driving continued cultural change across the company with integrity at the center of everything we do.” —Börje Ekholm, CEO of Ericsson since 2019, commenting on the latest DOJ agreement.
Changes Ericsson implemented since 2019
💼 Hired a new chief legal officer, a new head of group function legal affairs & compliance, and new head of corporate and government investigations
💰 Substantially increased the resources in compliance, corporate and government investigations and other assurance functions, including by adding headcount
🤫 Established of a multi-disciplinary business risk committee comprised of group-level senior executives
🎯 Stays committed to continuing to implement and test further enhancements
🗣 Significantly enhanced its cooperation and information sharing efforts
🤔 Flutterwave’s CEO is under scrutiny over allegations of financial misconduct
🕵️ Accenture took millions from an autocrat’s daughter despite corruption allegations
💸 One of the US’s greatest gifts to the global economy is under threat from Trump