Swedish telecommunications company discloses an alleged DPA breach

On March 2, 2022, Swedish telecommunications company Telefonaktiebolaget LM Ericsson issued a press release and filed a Form 6-K stating that the DOJ had informed the company on March 1, 2022 that disclosures made by Ericsson prior to the company’s deferred prosecution agreement regarding the company’s internal investigation into conduct in Iraq between 2011 and 2019 were “insufficient.”  The DOJ also determined that Ericsson breached the DPA when it failed to make subsequent disclosures related to the Iraq investigation after executing the DPA.  Ericsson, which is under a monitorship as part of the DPA, reported that it is cooperating with the DOJ to resolve the matter.

According to Ericsson, it conducted a year-long internal investigation in 2019 “supported by external legal counsel” that identified possible misconduct in Iraq and “serious breaches of compliance rules and the Code of Business Ethics.”  According to a February 15, 2022 Ericsson press release, the investigation uncovered “corruption-related conduct” in Iraq that included “a monetary donation without a clear beneficiary; paying a supplier for work without a defined scope and documentation; using suppliers to make cash payments; funding inappropriate travel and expenses; and improper use of sales agents and consultants.”  The investigation also uncovered payments made to “intermediaries and the use of alternative transportation routes” in order to circumvent Iraqi customs during a time period when “terrorist organizations, including ISIS, controlled some transport routes.”  Ericsson said it was unable to determine if terrorist groups ultimately received any of these payments.  Ericsson also stated that its investigation was unable to identify any Ericsson employee that was “directly involved in financing terrorist organizations.”  In addition to these issues, Ericsson said its investigation found violations of Ericsson’s internal controls, failures to comply with tax laws, and a risk of money laundering in connection with the payment schemes.  

As a result of Ericsson's investigation, several employees exited the company and number of third-party relationships were terminated.  The company also undertook several disciplinary and remedial actions to prevent future misconduct including “significant investments” in improving its ethics and compliance program and its “speak-up culture.”  Ericsson stated it has also prioritized the implementation of enhanced training for its Iraq business activities.  

Form 6-K | Press Release - March 2, 2022 | Press Release - February 15, 2022

 
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