On March 2, 2023, the US Department of Justice announced the resolution of an investigation into the breach by Telefonaktiebolaget LM Ericsson {Ericsson) of a Deferred Prosecution Agreement that DOJ had entered into with the company in 2019 based on violations of the Foreign Corrupt Practices Act.
The conduct that gave rise to the DPA took place between 2000 and 2016, according to the documents, and involved the use of third parties to pay bribes to government officials in China, Djibouti, Indonesia, Kuwait and Vietnam. Ericsson used false invoices, sham contracts, and slush funds to carry out the bribery schemes, and falsified its books and records in accounting for the payments. In order to resolve the DOJ investigation into this conduct, Ericsson entered into the DPA, paid a criminal penalty of more than $520 million, and agreed to the imposition of an independent compliance monitor. Ericsson’s Egyptian subsidiary, Ericsson Egypt Ltd., pleaded guilty to a one-count criminal information charging it with conspiracy to violate the FCPA.
In connection with this most recent proceeding,the DOJ has found that Ericsson has breached the terms of the DPA, which required the company’s full cooperation and truthful disclosure of all factual information and evidence related to the previously identified bribery schemes, as well as evidence and allegations relating to possible FCPA violations in other jurisdictions. As a result, Ericsson has pleaded guilty to the charges deferred in 2019: one count of conspiracy to violate the anti-bribery provisions of the FCPA, and one count of conspiracy to violate the books and records and internal controls provisions of the statute. In addition, as previously announced by Ericsson, the three-year independent compliance monitor has been extended by one year, and Ericsson will serve a sixteen-month term of probation. Furthermore, the cooperation credit originally granted to the company has been eliminated, and an additional criminal penalty of $206,728,848 has been assessed.
The plea agreement remains to be approved by the court. A hearing is scheduled for March 20, 2023 in the US District Court for the Southern District of New York.
In a statement confirming the DOJ action, Ericsson emphasized the non-criminal nature of the breaches, and the fact that none of the underlying conduct took place after 2017. The company acknowledged the DOJ’s allegations that, in breach of the DPA, it had failed to provide documents and information in a timely manner, and had not properly disclosed the results of an internal investigation into conduct in Iraq. Börje Ekholm, the chief executive officer of Ericsson, added “This resolution is 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.”