October 22, 2021

DOJ informs Ericsson of DPA violation

Swedish telecommunications company Telefonaktiebolaget LM Ericsson disclosed on October 21, 2021, that it had received correspondence from the US Department of Justice informing the company of the DOJ’s determination that Ericsson was not in compliance with the Deferred Prosecution Agreement Ericsson entered into in December 2019.

In 2019, as part of the DPA, Ericsson admitted to paying bribes to officials in Djibouti, China, Indonesia, Kuwait and Vietnam through the use of sham contracts with third party consultants in violation of the Foreign Corrupt Practices Act.  The terms of the DPA required Ericsson to pay a criminal penalty of over $500 million, to enhance its compliance program, to continue cooperating with the DOJ’s investigation, and to retain an independent compliance monitor for the three-year duration of the DPA.  In parallel, the company paid nearly $540 million in disgorgement and prejudgment interest in a settlement with the US Securities and Exchange Commission, resolving the SEC’s investigation into violations of the anti-bribery, books and records and internal controls provisions of the FCPA.  The company’s Egyptian subsidiary, Ericsson Egypt Ltd., pleaded guilty to conspiracy to violate the FCPA, and in September 2021, one of Ericsson Egypt’s employees was indicted on FCPA and money laundering charges in the US District Court for the Southern District of New York.

Under the DPA, Ericsson agreed to “cooperate fully” with the DOJ “in any and all matters relating to the conduct” described in the DPA or any other conduct under investigation by the DOJ.  Such cooperation included “truthfully disclos[ing] all factual information with respect to [Ericsson’s] activities” requested by the DOJ including “the obligation of the Company to provide to” the DOJ “upon request any document, record, or other tangible evidence about which” the DOJ might inquire.  According to Ericsson’s disclosure, the DOJ believes that Ericsson has failed to provide documents and factual information required in order to satisfy the terms of the DPA.  No further information was provided in Ericsson’s press release as to the alleged breach.  Pursuant to the DPA, and as Ericsson stated in its release, the DOJ provided to Ericsson written notice of the breach of the DPA.  The DPA provides that Ericsson may respond in writing “to explain the nature and circumstances of such breach, as well as the actions the Company has taken to address and remediate the situation.”  The DOJ will consider that explanation in determining whether to institute prosecution resulting from the breach of the DPA. 

Ericsson press release