The Department of Justice said Friday Ericsson agreed to pay total penalties of more than $1 billion to resolve the government’s investigation into violations of the Foreign Corrupt Practices Act (FCPA) arising out of the company’s arrangement to make and improperly record tens of millions of dollars in improper payments around the world. This includes a criminal penalty of over $520 million and approximately $540 million to be paid to the U.S. Securities and Exchange Commission (SEC), in a related matter.
An Ericsson subsidiary pleaded guilty Friday for its role.
“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,” said Assistant Attorney General Brian Benczkowski of the Justice Department’s Criminal Division.
U.S. Attorney Geoffrey Berman of the Southern District of New York said: “Through slush funds, bribes, gifts, and graft, Ericsson conducted telecom business with the guiding principle that ‘money talks.’ [The] 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.”
According to admissions by Ericsson, beginning in 2000, and continuing until 2016, the company conspired with others to violate the FCPA by engaging in a longstanding scheme to pay bribes, to falsify books and records and to fail to implement reasonable internal accounting controls, said the DOJ. The government said the company used third-party agents and consultants to make bribe payments to government officials and/or to manage off-the-books slush funds. These agents were often engaged through sham contracts and paid pursuant to false invoices, and the payments to them were improperly accounted for in Ericsson’s books and records. The resolutions cover the company’s criminal conduct in Djibouti, China, Vietnam, Indonesia and Kuwait.
As part of a deferred prosecution agreement, Ericsson agreed to continue to cooperate with the department in any ongoing investigations and prosecutions relating to the conduct, including of individuals; to enhance its compliance program; and to retain an independent compliance monitor for three years.
Ericsson President/CEO Börje Ekholm said: “I am upset by these past failings. Reaching a resolution with the U.S. authorities allows us to close this legacy chapter. We can now move forward and build a stronger company.”
Ekholm continued: “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 program. This work will never stop.”
December 10, 2019
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