Ericsson To Pay $1bn To Settle US Corruption Charges

Swedish telecommunications equipment giant Ericsson has agreed to pay more than $1 billion (£760m) to settle a probe into alleged corruption including bribing public officials, the US Department of Justice said.

The company “admitted to a years-long campaign of corruption in five countries to solidify its grip on telecommunications business“, the agency said.

The company has also entered into a deferred prosecution agreement over criminal charges filed in a New York court, US authorities said.

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

Penalty

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

Ericsson admitted to conspiring with others to violate the FCPA to pay bribes and falsify books and records and by failing to implement reasonable internal accounting controls, the justice department said.

It said the company used third parties to pay bribes to government officials to secure and keep business.

Ericsson also retained consultants to create slush funds and transfer money to third parties, one of the complaints said.

A subsidiary, Ericsson Egypt, pleaded guilty in the Southern District of New York to a charge of conspiracy to violate the anti-bribery provisions of the FCPA.

“Through slush funds, bribes, gifts, and graft, Ericsson conducted telecom business with the guiding principle that ‘money talks,’” said US Attorney Geoffrey Berman of the Southern District of New York in a statement.

Ethics

Ericsson said it has reviewed its anti-corruption programme and worked to improve its ethics and compliance.

In a conference call on Saturday, Ericsson chief executive Borje Ekholm said certain employees in cetain countries, some of whom were executives, “acted in bad faith” and “knowingly failed to implement sufficient controls”.

He said what had happened was “completely unacceptable and hugely upsetting”.

Ericsson previously said it was cooperating with US authorities on the charges and in the third quarter said it had set aside $1.2bn to cover possible charges related to the probes.

The company confirmed the payments were fully covered by this provision and would not affect the company’s financial targets.