Ericsson has agreed to pay more than $1bn to settle US criminal and civil investigations into foreign corruption involving high-level executives that spanned almost two decades.
The Swedish telecommunications group admitted to a long-running scheme to use agents and consultants to bribe government officials in Djibouti, China, Vietnam, Indonesia and Kuwait.
The settlement announced on Friday draws a line under investigations by the US Department of Justice and Securities and Exchange Commission, and was in line with the company’s previously disclosed provisions.
“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 Brian Benczkowski, head of the criminal division of the justice department, in a statement.
Mr Benczkowski had signalled the deal in a speech earlier this week, where he said the justice department had recovered $1.6bn in corporate resolutions of foreign bribery cases in 2019, beating the previous record of $1.3bn set in 2016 under the Obama administration.
As part of the settlement, Ericsson struck a three-year deferred prosecution agreement and a subsidiary pleaded guilty to conspiracy to violate the US Foreign Corrupt Practices Act.
The conduct admitted by the company between 2000 and 2016 ranged from cash bribes disguised as sham contracts to in-kind bribes for government officials and “off-the-books slush funds” used to make payments to customers who would ordinarily not pass its due diligence processes.
In Djibouti, from 2010 to 2014, an Ericsson subsidiary paid $2.1m in bribes to top government officials to win a contract with the country’s state-owned telecoms company, according to the company’s admissions.
Over 17 years in China, subsidiaries funded tens of millions of dollars of gifts, travel and entertainment for officials, while in Vietnam and Indonesia the bribery involved millions of dollars to consulting companies to form slush funds, the company admitted.
The admitted conduct in Kuwait involved an Ericsson subsidiary that won a $182m contract after an employee received inside information on the tender; it paid the source’s consulting company $450,000.
Steve Peikin, co-director of the SEC’s enforcement division, said Ericsson had “engaged in an egregious bribery scheme for years, spanning multiple continents, by surreptitiously using slush funds and funnelling money through sham intermediaries”.
The settlement involved a $520m criminal penalty due to the justice department and the return of $540m in ill-gotten gains, payable to the SEC, as well as the imposition of an outside monitor for three years. The SEC’s case included alleged bribery in Saudi Arabia.
Though Ericsson had co-operated with the investigations, the justice department said the company had failed to voluntarily disclose the conduct, provide all materials in a timely manner, and did not take “adequate disciplinary measures” with some employees involved in the scheme.
Börje Ekholm, Ericsson’s chief executive, said in a statement he was “upset by these past failings”, adding that the company had “not always met our standards in doing business the right way”.
“We have worked tirelessly to implement a robust compliance programme. This work will never stop,” he said.