DOJ Says Ericsson Breached Terms of DPA Over Internal Investigation Into Conduct in Iraq

DOJ said Swedish telecommunications company Ericsson breached the terms of its 2019 deferred prosecution agreement (DPA) by failing to disclose information from an internal investigation into alleged misconduct in Iraq, Ericsson said in a SEC filing. Ericsson's disclosure about the investigation, which covered conduct in 2011-2019, was insufficient, DOJ told the company March 1. Ericsson said it's in communication with DOJ over the facts of the DPA breach and "it is premature to predict the outcome of this matter" at this stage.

The DPA was reached in December 2019 after one of Ericsson's employees was charged in a Foreign Corrupt Practices Act case with helping to bribe government officials in Djibouti to win a contract valued at around $24 million (see 2109090014). The employee, Afework Bereket, was indicted for his alleged role in this scheme, which also included leading an Ericsson subsidiary to enter into a fraudulent contract with a consulting company that then signed off on fake invoices to hide the bribe payments. DOJ in October accused Ericsson of violating the terms of the DPA (see 2110220031).

The current DPA breach, as established by DOJ, concerns Ericsson's disclosures about an internal investigation that found "serious breaches of compliance rules and the Code of Business Ethics." Ericsson said the investigation didn't find that any of its employees were directly involved in financing terrorist organizations. Nevertheless, several employees were fired and "other remedial actions were taken," including the termination of relationships with third-party companies in Iraq.