October 17, 2019

Swedish telecom reserves over $1 billion for anticipated FCPA resolution

On September 26, 2019, Telefonaktiebolaget LM Ericsson (Ericsson) announced in a filing with the US Securities and Exchange Commission (SEC) that it had made a cost provision of $1.2 billion related to settling Foreign Corrupt Practices Act investigations by the US Department of Justice and the SEC.  Of that $1.2 billion, Ericsson said that about $1 billion would be used for DOJ and SEC sanctions, with the remaining reserve used for “other costs related to resolving the investigation.”  

Ericsson is a Swedish multinational telecommunications company.  The company stated that it had been cooperating voluntarily with the SEC since 2013 and with the DOJ since 2015.  Ericsson stated that the investigations had revealed breaches of its Code of Business Ethics and the FCPA in China, Indonesia, Kuwait, Saudi Arabia, Vietnam, and Djibouti. According to Ericsson, these violations resulted from a failure to respond appropriately to red flags and inadequate internal controls that enabled a “limited number of employees” to circumvent existing controls for improper purposes.  The company said it has taken personnel action and has enhanced its compliance program.  Ericsson noted that settlement negotiations are ongoing.