Ericsson pleads guilty to US charges and will pay £206 million fine

Kit vendor Ericsson has agreed to pay $206 million to US authorities, following allegations that it breached the terms of a previous $1 billion settlement reached in 2019 related to international corruption.

Ericsson will enter a guilty plea with regards to previously deferred charges relating to corruption and pay a fine of $206,728,848, which the US Department of Justice says will bring the 2019 Deferred Prosecution Agreement (DPA) to an end.

The allegations were that Ericsson breached the terms of a $1 billion settlement reached with US authorities in 2019. This involved Foreign Corrupt Practices Act (FCPA) violations related to Ericsson’s activities in China, Djibouti, Indonesia, Kuwait, and Vietnam.

As well as the $1 billion pay-off, at the time Ericsson agreed to a three-year period of compliance monitoring with the DoJ. However when other evidence came to light – most notably claims it may have indirectly bribed ISIS in Iraq – US authorities decided the DPA had been breached.

In January the firm said it had made a provision totalling $220 million in relation to a potential resolution of the allegations – so this fine is accounted for in Ericsson’s financial projections.

“Taking this step today means that the matter of the breaches is now resolved,” said Börje Ekholm, CEO of Ericsson. “This allows us to focus on executing our strategy while driving continued cultural change across the company with integrity at the centre of everything we do. This resolution is a stark reminder of the historical misconduct that led to the DPA.  We have learned from that and we are on an important journey to transform our culture. To be a true industry leader, we must be a market and technology leader while also being a leader in how we conduct our business.

“The Ericsson Executive Team and I remain committed to this transformation and we continue to implement stringent controls and improved governance, ethics and compliance across our company, with corresponding enhancements to our risk management approach. The change continues and we are a very different company today and have made important changes since 2017 and over 2022.”

The DOJ added: “[Ericsson] has significantly enhanced its compliance program and internal accounting controls through structural and leadership changes, including but not limited to the hiring of a new Chief Legal Officer and new Head of Corporate and Government Investigations and the establishment of a multi-disciplinary Business Risk Committee comprised of Group-level senior executives … and has committed to continuing to implement and test further enhancements… [Ericsson] has significantly enhanced its cooperation and information sharing efforts.”

The rolling saga has no doubt been a weight around the neck of Ericsson, both in regards to the fines themselves and the PR stink that comes with them. It will no doubt hope this latest fine and guilty plea will more or less draw a line underneath it all.

However we are told with regards to the accusations related to Iraq, Ericsson ‘continues to thoroughly investigate the facts in full cooperation with the DOJ and the US Securities and Exchange Commission’. Still, barring some new information, at the present moment from the noises coming out of both Ericsson and the US authorities it would appear the matter is more or less resolved.

What happens to all the money is another question – there is no mention in the release of it being distributed around the countries where the alleged corruption took place, so presumably it’s just going straight to the coffers of the US government.

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