Sweden’s Ericsson is to pay a US$206 million fine and plead guilty after violating a 2019 deal with US prosecutors that required the telecoms firm to properly disclose information on its activities in Iraq, China and Djibouti.
The plea agreement with the US Department of Justice (DOJ) follows a scandal over possible payments made to the Islamic State militant group through its activities in Iraq.
The department said in a statement that the firm fell short in disclosing activities after entering a deferred prosecution agreement (DPA) in 2019 to resolve a probe into years of alleged corruption in China, Vietnam and Djibouti.
Photo: AFP
Under the DPA, the department had agreed to hold off prosecuting Ericsson for three years if it paid a steep penalty, implemented “rigorous internal controls,” complied with US laws and cooperated fully on any ongoing investigations.
“Ericsson breached the DPA by violating the agreement’s cooperation and disclosure provisions,” the department said in a statement.
Although such agreement breaches have been historically rare, the department has warned a number of companies in since US President Joe Biden took office as it cracks down on corporate misconduct and repeat offenders.
Ericsson would be required to serve a probation term through June next year and agreed to a one-year extension of an independent compliance monitor, the department said.
Ericsson previously paid a total criminal penalty of more than US$520 million and agreed to the imposition of an independent compliance monitor for three years, the department said on Thursday, referring to the 2019 settlement.
“This resolution is a stark reminder of the historical misconduct that led to the DPA,” Ericsson chief executive officer Borje Ekholm said in a statement. “We have learned from that and we are on an important journey to transform our culture.”
Ericsson last year disclosed that a 2019 internal probe had identified payments designed to circumvent Iraqi customs at a time when militant organizations, including the Islamic State, controlled some routes.
The internal probe did not conclude that the firm made or was responsible for any payments to any terrorist organization, and the firm continues to probe the matter “in full cooperation with the DOJ and the US Securities and Exchange Commission,” Ericsson said.
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