Ericsson to Pay Additional $206M Fine After Breaching DPA Provisions
Ericsson will plead guilty and pay a criminal penalty of more than $206 million after breaching provisions of a 2019 deferred prosecution agreement (DPA) stemming from Foreign Corrupt Practices Act violations, DOJ said March 3. Ericsson also will plead guilty to engaging in a “long-running scheme to violate" the FCPA by paying bribes, falsifying books and records, and "failing to implement reasonable internal accounting controls in multiple countries around the world,” DOJ said.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
DOJ offered Ericsson the DPA in 2019 1912090022), but the company “repeatedly failed to fully cooperate and failed to disclose evidence and allegations of misconduct in breach of the agreement,” Assistant Attorney General Kenneth Polite said. Due to “broken promises,” Ericsson must plead guilty to two criminal offenses and pay an additional fine, Polite said, saying DOJ is putting companies “on notice.” The agency will “closely scrutinize their compliance with all terms of corporate resolution agreements," he said, with "serious consequences for those that fail to honor their commitments.”
From 2000 to 2016, Ericsson used third-party agents and consultants to bribe government officials and manage off-the-books slush funds in Djibouti, China, Vietnam, Indonesia and Kuwait, DOJ said. The agents were engaged through “sham contracts and paid pursuant to false invoices,” with the payments “improperly accounted for in Ericsson’s books and records.”
To resolve the charges, Ericsson entered the DPA with a two-count criminal information filed in the Southern District of New York, DOJ said. The company paid a criminal penalty of over $520 million and agreed to independent compliance monitoring for three years. Its Egyptian subsidiary also pleaded guilty to a one-count criminal information charging conspiracy to violate the anti-bribery provisions of the FCPA.
Following the 2019 resolution, Ericsson breached the DPA by “failing to truthfully disclose" all factual information and evidence related to the Djibouti scheme, the China scheme, and other potential violations of the FCPA’s anti-bribery or accounting provisions, DOJ said. It also failed to promptly report and disclose evidence and allegations of conduct related to business activities in Iraq that may constitute a violation of the FCPA. The disclosure failures prevented the U.S. from bringing charges against certain individuals and taking key investigative steps, DOJ said.
Ericsson’s breach of its obligations under the DPA indicates it “did not learn its lesson, and it is now facing a steep price for its continued missteps,” said Damian Williams, U.S. attorney for the Southern District of New York. Under the terms of the plea agreement, which must be accepted by the court, Ericsson agreed to plead guilty to the original charges deferred by the 2019 DPA: one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of conspiracy to violate the internal controls and books and records provisions of the FCPA. Ericsson didn't comment.