Sweden’s #Ericsson to pay $1 billion penalty on bribery charges

The US Department of Justice and the Securities and Exchange Commission said Friday that Sweden-based telecommunications giant Ericsson will pay fines of more than $1 billion for allegedly paying bribes to officials in multiple countries, writes Kellie Mejdrich.

According to a complaint filed in the Southern District of New York, the company, formally known as Telefonaktiebolaget LM Ericsson, was charged with multiple violations of the Foreign Corrupt Practices Act.

The main scheme, from 2011 to 2017, involved using subsidiaries that allegedly paid about $62 million in bribes to government officials in Djibouti, Saudi Arabia and China “to obtain or retain business,” the authorities said.

Those bribes yielded approximately $427 million in business profits, attorneys charged in the complaint.

“Ericsson has admitted to a years-long campaign of corruption in five countries to solidify its grip on telecommunications business,” U.S. Attorney Geoffrey Berman said in a statement. “Through slush funds, bribes, gifts, and graft, Ericsson conducted telecom business with the guiding principle that ‘money talks.’”

The SEC complaint also describes how the bribery schemes — and alterations to company and subsidiary financial records to hide the actions — involved Malaysia, Kuwait, Qatar, Vietnam and Indonesia.

The authorities accused Ericsson of paying bribes to influence business decisions by public officials in numerous ways, including travel and entertainment expenses for public officials and their families as well as through executing consultant contracts from individuals close to public officials.

The SEC said Ericsson agreed to pay more than $539 million in disgorgement and prejudgment interest to settle the charges. And to resolve parallel criminal charges by the Department of Justice, the SEC said Ericsson will pay a $520m criminal penalty and enter into a deferred prosecution agreement.

A subsidiary, Ericsson Egypt, also pleaded guilty to conspiracy to violate the anti-bribery provisions of the FCPA, SEC said.

In a statement on its website, Ericsson confirmed it had entered into agreements with both the Department of Justice and the SEC. The company said the combined payment of €1.06 billion would be fully covered by an amount set aside in Q3 2019.

“As part of the settlement, Ericsson has agreed to engage an independent compliance monitor for a period of three years while the Company continues to undertake significant reforms to strengthen its Ethics & Compliance program,” it said.

Share this article: