Ericsson Whistleblower Awarded $279m By SEC

The US Securities and Exchange Commission has reportedly issued its largest-ever award in it’s cash-for-tips program.

The Wall Street Journal, citing people familiar with the matter, reported that the SEC’s record $279 million whistleblower award was related to a bribery case against Swedish telecommunications giant Ericsson.

In December 2019 the US DoJ confirmed Ericsson had agreed to pay more than $1 billion to settle a probe into alleged corruption including bribing public officials in a number of countries.

Bribery probe

At the time, Ericsson “admitted to a years-long campaign of corruption in five countries to solidify its grip on telecommunications business“, the US agency said at the time.

The DoJ said at the time that Ericsson’s corrupt activities had extended from at least 2000 to 2016 in countries including Djibouti, China, Vietnam, Indonesia and Kuwait.

The settlement, believed to be one of the highest ever under the US’ Foreign Corrupt Practices Act (FCPA), included a $520m criminal penalty to the justice department and a payment of $540m to the Securities and Exchange Commission (SEC).

As a result of the 2019 settlement, the company entered into a deferred prosecution agreement (DPA) with the US Attorney’s Office for the Southern District of New York.

But that was not the only official censure for Ericsson.

In February 2022, Ericsson’s own investigation in 2019 found payments had been made to the Islamic State militant group in Iraq.

The US Securities and Exchange Commission (SEC) in June 2022 then opened up an investigation of Ericsson’s conduct in Iraq in 2019.

Ericsson reached a resolution with the US Department of Justice (DOJ) regarding non-criminal breaches of its 2019 Deferred Prosecution Agreement (DPA).

Ericsson agreed to pay a $207 million penalty and pleaded guilty to violating the anti-bribery provisions of the Foreign Corrupt Practices Act.

Whistleblower payout

Now the Wall Street Journal has reported that the SEC’s record $279 million whistleblower award was related to the $1.1 billion settlement the Swedish company reached with US authorities in 2019.

According to the WSJ, the SEC didn’t name the enforcement action underlying the award and didn’t identify the tipster, in keeping with whistleblower protection rules that prevent the regulator from divulging this information to the public.

Under SEC rules, a whistleblower can receive an award of between 10 and 30 percent of the fines collected in SEC civil-enforcement actions and related actions from other enforcement agencies resulting from a tip, assuming the SEC collects more than $1 million.

A spokesman for the SEC declined to comment, the WSJ reported.

A spokesman for Ericsson also declined to comment.

It is also reported that two other individuals also separately applied to receive a whistleblower award from the SEC, but their claims were denied.

The $279 million whistleblower award topped the previous record, a $114 million whistleblower award the SEC issued to an individual in October 2020.

The financial penalty sanctions against Ericsson are among the highest ever imposed by the US government for violations of the Foreign Corrupt Practices Act.