Electronics Production |
Ericsson to pay $1B to resolve US corruption investigations
Swedish telecom company Ericsson has reached a resolution on U.S. FCPA investigations by the the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC).
The resolution relates to historical FCPA breaches ending Q1 2017. While the Company had a compliance program and a supporting control framework, they were not adequately implemented. Specifically, certain employees in some markets, some of whom were executives in those markets, acted in bad faith and knowingly failed to implement sufficient controls. They were able to enter into transactions for illegitimate purposes and, together with people under their influence, used sophisticated schemes in order to hide their wrongdoing. The company agreed to enter into a Deferred Prosecution Agreement (DPA) with the DOJ to resolve criminal charges relating to violation of bribery provision of the FCPA in Djibouti. The DPA also resolves criminal charges relating to violations of the accounting provisions of the FCPA in China, Djibouti, Indonesia, Kuwait, and Vietnam. In connection with the matter in Djibouti, Ericsson's Egyptian subsidiary pled guilty to bribery today. As part of the resolution Ericsson will pay a fine of USD 520,65 million. Ericsson has also agreed with the SEC to the entry of a judgment to resolve 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. As part of the resolution, Ericsson will pay financial sanction of USD 458,38 million, plus pre-judgement interest of USD 81,54 million. In parallel to the investigations, Ericsson say that it has been conducting a review of the its anti-corruption program since 2016 together with external expert advisors. Based on this review, Ericsson has been taking significant steps to improve its Ethics and Compliance program. “I am upset by these past failings. Reaching a resolution with the US authorities allows us to close this legacy chapter. We can now move forward and build a stronger company," says Börje Ekholm, President and CEO, in the press release. "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,” he continues. The combined payment of USD 1.06 billion (SEK 10.1 billion) is fully covered by the SEK 11.5 billion provision taken in Q3 2019.