On March 2, 2022, Swedish telecommunications company Telefonaktiebolaget LM Ericsson has revealed that the US Department of Justice is investigating possible breaches of the Deferred Prosecution Agreement entered into in 2019. According to Ericsson, the DOJ has determined that the company breached the terms of the DPA by not fully disclosing information about the company’s internal investigation into conduct in Iraq between 2011 and 2019. The DOJ also found that Ericsson breached the DPA when it failed to disclosse additional information about 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 press release, the investigation uncovered “corruption-related misconduct” 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 whether terrorist groups ultimately received any of these payments; the company also said that it was unable to identify any Ericsson employee who was “directly involved in financing terrorist organizations.” In addition to these issues, Ericsson said its investigation found violations of Ericsson’s internal controls, noncompliance 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 a 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 is also implementing enhanced training for its Iraq business activities.