Telefonaktiebolaget LM Ericsson Charged with FCPA Violations


Swedish multinational corporation Telefonaktiebolaget LM Ericsson, better known as simply “Ericsson”, was charged by the Securities and Exchange Commission (SEC) “with engaging in a large-scale bribery scheme involving the use of sham consultants to secretly funnel money to government officials in multiple countries. The bribes netted Ericsson hundreds of millions in profits.” This scheme was perpetrated in five different countries over the course of almost twenty years as an attempt to create a stronghold for Ericsson’s business. Both the SEC and Department of Justice were involved in the case, as there were also criminal implications for the company and its executives.

The Department of Justice in its Press Release on this matter wrote that Ericsson:

“agreed to pay total penalties of more than $1 billion to resolve the government’s investigation into violations of the Foreign Corrupt Practices Act (FCPA) arising out of the Company’s scheme to make and improperly record tens of millions of dollars in improper payments around the world.  This includes a criminal penalty of over $520 million and approximately $540 million to be paid to the U.S. Securities and Exchange Commission (SEC) in a related matter.  An Ericsson subsidiary pleaded guilty today for its role in the scheme. 

Ericsson entered into a deferred prosecution agreement with the department in connection with a criminal information filed today in the Southern District of New York charging the Company with conspiracies to violate the anti-bribery, books and records, and internal controls provisions of the FCPA.  The Ericsson subsidiary, Ericsson Egypt Ltd, pleaded guilty today in the Southern District of New York to a one-count criminal information charging it with conspiracy to violate the anti-bribery provisions of the FCPA.  The case is assigned to U.S. District Judge Alison J. Nathan of the Southern District of New York.  Pursuant to its agreement with the department, Ericsson has committed to pay a total criminal penalty of $520,650,432 within 10 business days of the sentencing hearing, and has agreed to the imposition of an independent compliance monitor. 

“Ericsson’s corrupt conduct involved high-level executives and spanned 17 years and at least five countries, all in a misguided effort to increase profits,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “Such wrongdoing called for a strong response from law enforcement, and through a tenacious effort with our partners in the Southern District of New York, the SEC, and the IRS, today’s action not only holds Ericsson accountable for these schemes, but should deter other companies from engaging in similar criminal conduct.” “

The countries that Ericsson’s scheme involved included Vietnam, Indonesia, Kuwait, Djibouti, and most notably, China. Ericsson officials used many millions worth of bribes. The DoJ estimated that Ericsson spent over $30 million in bribes in China between 2013 and 2016. It is notable that Ericsson is not a US company, nor did it conduct its fraud in the US, but the two US agencies are being paid by them to settle the matter. Of course, Ericsson conducts business and this will affect their books that they report to the IRS. Perhaps it would be better if the countries involved would be involved in settling the fraud. But perhaps they will bring their own legal proceedings for the matter.

This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship.  Please note that the prior results discussed herein do not guarantee similar outcomes.

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