Ericsson to Pay Additional $206M Fine After Breaching DPA Provisions
Ericsson agreed to plead guilty and pay a criminal penalty of more than $206 million after breaching cooperation and disclosure provisions of a 2019 deferred prosecution agreement (DPA), said DOJ Thursday. Ericsson also will plead guilty to engaging in a “long-running scheme to violate the Foreign Corrupt Practices Act (FCPA) by paying bribes, falsifying books and records, and failing to implement reasonable internal accounting controls in multiple countries around the world,” DOJ said.
The DOJ offered Ericsson the DPA in 2019 to resolve an investigation into “serious FCPA violations,” it said. After agreeing to comply with the agreement, it “repeatedly failed to fully cooperate and failed to disclose evidence and allegations of misconduct in breach of the agreement,” said Assistant Attorney General Kenneth Polite.
Due to “broken promises,” Ericsson must plead guilty to two criminal offenses and pay an additional fine, said Polite, saying DOJ is putting companies “on notice.” The agency will “closely scrutinize their compliance with all terms of corporate resolution agreements," he said, with "serious consequences for those that fail to honor their commitments.”
From 2000 to 2016, Ericsson used third-party agents and consultants to bribe government officials and manage off-the-books slush funds in Djibouti, China, Vietnam, Indonesia and Kuwait, said DOJ. The agents were engaged through “sham contracts and paid pursuant to false invoices,” with the payments “improperly accounted for in Ericsson’s books and records.”
To resolve the charges, Ericsson entered the DPA with a two-count criminal information filed in the Southern District of New York, DOJ said. The company paid a criminal penalty of over $520 million and agreed to independent compliance monitoring for three years. Its Egyptian subsidiary also pleaded guilty to a one-count criminal information charging conspiracy to violate the anti-bribery provisions of the FCPA.
After the 2019 resolution, Ericsson breached the DPA by “failing to truthfully disclose" all factual information and evidence about the Djibouti scheme, the China scheme, and other potential violations of the FCPA’s anti-bribery or accounting provisions, DOJ said. It also failed to promptly report and disclose evidence and allegations of conduct in business activities in Iraq that may constitute a violation of the FCPA. The disclosure failures prevented the U.S. from bringing charges against certain individuals and taking key investigative steps, DOJ said.
Ericsson’s breach of its obligations under the DPA indicates it “did not learn its lesson, and it is now facing a steep price for its continued missteps,” said U.S. Attorney Damian Williams for the Southern District of New York. Under the plea agreement, which must be accepted by the court, Ericsson agreed to plead guilty to the original charges deferred by the 2019 DPA: one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of conspiracy to violate the internal controls and books and records provisions of the FCPA.
An Ericsson spokesperson, responding to our request for comment, referred us to a Thursday news release and company Q&A in which CEO Borje Ekholm said the agreement with DOJ "means that the matter of the breaches is now resolved." It will allow Ericsson to focus on strategy "while driving continued cultural change across the company with integrity at the center of everything we do," said Ekholm. He called the resolution 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."