Ericsson pays $1bn to resolve corruption probe

A unit of Ericsson pleaded guilty to foreign bribery and the parent company agreed to pay more than $1bn to resolve a long-running US corruption investigation involving payoffs in Asia and the Middle East.

The Stockholm-based company admitted to a years-long campaign of corruption aimed at solidifying its grip on the telecom business, according to the attorney for the Southern District of New York, Geoffrey Berman. The settlement outlined tens of millions of dollars in illicit payments in five countries.

“Through slush funds, bribes, gifts and graft, Ericsson conducted telecommunications business with the guiding principle that ‘money talks’,” Berman said in a written statement announcing the settlement.

From 2000 to 2016, Ericsson conspired with others to violate the US Foreign Corrupt Practices Act, paying bribes, falsifying books and records and failing to implement reasonable internal accounting controls, the justice department said. The company bribed government officials through third-party agents and consultants, it said.

The settlement includes a $520m criminal penalty imposed by the US justice department and a civil payment of about $540m to the Securities and Exchange Commission. As part of a deferred prosecution deal, an Egyptian subsidiary of the company pleaded guilty to a conspiracy charge.

“This is a reflection of some hugely embarrassing and unacceptable behaviour in the past, and of course that is something we as a company are ashamed of and I personally am ashamed of,” Ericsson CEO Borje Ekholm said. “But the settlement also allows us to put an end to a very long and wide-ranging process.”

The company will add an independent monitor to ensure its compliance with anti-bribery laws as part of the settlement in federal court in New York.

In its settlement announcement after the close of US markets, the US government outlined bribery spanning the globe. By way of a subsidiary, the company made about $2.1m in bribe payments between 2010 and 2014 to high-ranking government officials in Djibouti to obtain a contract with the stateowned telecom company.

An Ericsson subsidiary entered into a sham contract and approved fake invoices to conceal the payments, it said.

In China, Ericsson subsidiaries caused tens of millions of dollars to be paid to consultants and service providers over 16 years to 2016. The government outlined $45m in off-thebook payments to create slush funds to win business in _Indonesia, and described other off-the-book schemes in Vietnam and Kuwait.

In September Ericsson said it had set aside 12-billion krona to cover US penalties. Ericsson has said it’s been co-operating with US investigators since 2013.

The justice department said Ericsson earned a 15% reduction in penalties for its co-operation. However, it said Ericsson did not receive full credit for co-operation because it did not disclose some allegations of corruption, didn’t produce certain documents and failed to take adequate disciplinary measures against some employees.

Ericsson said 49 individuals involved in misconduct had their employment terminated or left voluntarily when the company began investigations.

The $1bn overall penalty is near the top of foreign corruption cases and above those assessed against other telecommunications companies.

Telia paid $965m in penalties in 2017 after admitting to paying hundreds of millions of dollars in bribes to a government official in Uzbekistan.