Ericsson agreed to pay the DOJ and SEC over $1 billion in one of the biggest Foreign Corrupt Practices Act enforcement actions ever. Telefonaktiebolaget LM Ericsson will pay the DOJ a criminal penalty of over $520 million and nearly $540 million to the SEC in disgorgement and interest. An Ericsson subsidiary from Egypt pleaded guilty Friday to criminal charges in federal court in New York. In a civil complaint the SEC charged Ericsson with violating the anti-bribery, books and records, and internal controls provisions of the FCPA.
The DOJ charged Ericsson with conspiracies to violate the anti-bribery, books and records, and internal controls provisions of the FCPA .A subsidiary named Ericsson Egypt Ltd pleaded guilty Friday to a one-count criminal information charging it with conspiracy to violate the anti-bribery provisions of the FCPA. Ericsson agreed to retain an independent compliance monitor for three years under a deferred prosecution agreement.
The company created slush funds that it used to bribe officials via intermediaries in Djibouti, China, Vietnam, Indonesia, and Kuwait. In Djibouti between 2010 and 2014, an Ericsson unit paid $2.1 million in bribes. It used a sham contract with a consulting company to hide the corrupt payments. The subsidiary won a contract worth $22.5 million from a state-owned firm to modernize its mobile networks system.Ericsson subsidiaries in China paid millions of dollars that agents, consultants, and service providers used to bribe officials. Between 2013 and 2016, about $31.5 million went to intermediaries under sham contracts for services that were never performed, the DOJ said. Subsidiaries in Southeast Asia paid phony invoices from consulting companies to create off-the-books slush funds amounting to $4.8 million in Vietnam and $45 million in Indonesia.
Ericsson paid $450,000 in bribes in Kuwait for inside information about a tender to modernize a state-owned company’s radio access network. An Ericsson subsidiary won the contract valued at $182 million.In September Ericsson said it had reserved around $1.2 billion to resolve FCPA violations with the DOJ and SEC. Ericsson first disclosed the FCPA investigation in a company statement in June 2016. It said it had received “a voluntary request” for information from U.S. authorities, according to data from FCPA Tracker.
In March this year Russia’s biggest mobile phone company, MTS, paid $850 million in penalties to the DOJ and SEC to resolve FCPA violations.Last year Sweden’s Telia paid $965 million in total penalties to resolve FCPA offenses in Uzbekistan. The penalties were paid to enforcement agencies in the United States, Sweden, and the Netherlands.
In 2016, Amsterdam-based VimpelCom reached a $795 million FCPA resolution with the DOJ and SEC. Some of the penalties went to Dutch enforcement authorities.Ericsson agreed Friday to help the DOJ with “any ongoing investigations and prosecutions, including of individuals.”
Jeffrey Newman represents whistleblowers including those who reveal information to the Securities & Exchange Commission. Jeff@JeffNewmanLaw.com