Ericsson resolves DPA violations with guilty plea

Ericsson resolves DPA violations with guilty plea

Ericsson is pleading guilty to a number of deferred charges from the U.S. Department of Justice (DOJ) arising from offences committed before 2017.

The allegations indicated possible corruption among salespeople and consultants, and were based on irregular expense claims that may have been bribe payments to terrorist groups in order to circumvent Iraqi customs.

The plea will also see Ericsson hand over a fine of US$206,728,848 to the DOJ, concluding the Deferred Prosecution Agreement (DPA) signed by the two parties in 2019 to resolve Ericsson’s various declared violations of the Foreign Corrupt Practices Act (FCPA), committed across several of its markets between 2010 and 2016.

Since Ericsson entered the DPA in 2019, the DOJ has brought no new criminal misconduct charges or allegations against the vendor, and this remains the case at the DPA’s conclusion. However, the DOJ did inform Ericsson on two occasions (October 2021 and March 2022) that it had made non-criminal violations of the DPA by failing to submit relevant documentation by required deadlines, as well as failing to provide salient information to the DOJ regarding its 2019 internal investigation of its activities in Iraq.

The DPA terms stipulate that the DOJ has unilateral authority both to decide whether Ericsson has breached the agreement, and to prosecute the company in the event of any violation. Accordingly, Ericsson’s guilty plea relates to the FCPA violations to which it admitted under the DPA.

Börje Ekholm, CEO of Ericsson since 2017, hailed the step as a “resolution” of the issue which would help drive “cultural change across the company.” He claimed that Ericsson had learned from its “historical misconduct” and would “transform [its] culture” to become a leader in how we conduct our business”, implementing “stringent controls and improved governance, ethics and compliance.”

Ericsson’s internal 2019 investigation did not find that the firm had made or was responsible for making payments to any terrorist organisations. The vendor carried out further probes across 2022 which upheld this finding.

The DOJ noted that Ericsson had “significantly enhanced its compliance program and internal accounting controls through structural and leadership changes.”

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