Ericsson Pleads Guilty to Breaching US Agreement in Bribery Case

Ava Benny-Morrison, Bloomberg News

The Ericsson AB stand on the opening day of the Mobile World Congress at the Fira de Barcelona venue in Barcelona, Spain, on Monday, Feb. 27, 2023. The annual flagship mobile industry and technology event runs from Feb. 27 to March 2. Photographer: Angel Garcia/Bloomberg , Bloomberg

(Bloomberg) -- Ericsson AB pleaded guilty to breaching a 2019 settlement with the Justice Department after it failed to be transparent about bribery schemes it operated in China and East Africa.

The telecommunications company, which admitted Tuesday in federal court to violating the Foreign Corrupt Practices Act, also agreed to pay a more than $206 million criminal penalty.

“It does turn the page for Ericsson and is a fundamentally important step for the company,” said Ericsson’s attorney, Joseph Warin.

The 5G equipment maker pleaded guilty to two charges that were part of a 2019 deferred prosecution agreement over allegations it paid bribes to government officials and managed off the books slush funds in China, South East Asia, East Africa and Kuwait. As part of that earlier agreement, Ericsson paid a $520 million penalty and agreed to oversight from an independent compliance monitor for three years.

In bringing action against the company in early March, Manhattan federal prosecutors said Ericsson breached the 2019 agreement by failing to truthfully disclose evidence related to its schemes in China and Djibouti. It also didn’t promptly come forward with evidence about its business activities in Iraq, which prevented US authorities from filing charges against certain individuals, the government said.

US District Judge Laura Swain said the company’s past conduct was “striking in its magnitude” and indicative of a lack of respect for the law. It involved high-level company executives and spanned almost two decades and five countries. She noted, however, that the company had instituted compliance measures, brought in new leadership and retained an independent monitor since 2019.

Ericsson’s head of global litigation and disputes entered the guilty plea on the company’s behalf Tuesday, telling the judge that employees used third party agents to pay bribes to government officials in countries the company worked in between 2000 and 2016.

If the case went to trial, the government would have relied on testimony from co-conspirators, emails referencing the bribery scheme, documents including fake invoices and sham agreements, the prosecution said.

The company will remain on probation until June 2024.

Read More: Ericsson Sued by Investor Over Disclosure of Possible ISIS Bribe

Ericsson is still facing a probe in the US over its operations in Iraq and is contending with a fresh round of allegations that emerged in Swedish media a year ago. The company said at the time it may have paid the ISIS terrorist group to gain access to transport routes.

The case is USA v. Ericsson, 19-cr-00884, US District Court, Southern District of New York (Manhattan).