Swedish telecoms giant Ericsson is to pay more than $1bn (£760m) to settle bribery charges brought by the Securities and Exchange Commission (SEC) and the US Department of Justice (DOJ), and is required to appoint an independent compliance monitor, reports Accountancy Daily.
The large-scale bribery scheme involved the use of sham consultants to secretly funnel money to government officials in multiple countries in a bid to dominate the local telecoms market, the US authorities claimed.
The SEC alleged that between 2011 and 2017, Ericsson subsidiaries obtained business valued at approximately $427m by using third parties to bribe officials in Saudi Arabia, China, and Djibouti.
The US regulator also claimed Ericsson had third parties pay for lavish trips and entertainment for government officials or their family members. In exchange for the bribes, Ericsson received lucrative contracts from state-owned telecommunications entities in these countries, resulting in hundreds of millions in profits.
In addition, the regulator alleged that Ericsson’s subsidiaries violated the Foreign Corrupt Practice Act (FCPA) in Vietnam, Indonesia and Kuwait, by maintaining slush funds, using code names, and creating sham transactions and invoices.
The SEC’s investigation claimed that Ericsson violated the anti-bribery, books and records, and internal controls provisions of the federal securities laws. The company has agreed to pay more than $539m in disgorgement and prejudgment interest to settle the SEC’s charges.
To resolve parallel criminal charges by the DOJ, Ericsson has agreed to pay a $520m criminal penalty and enter into a deferred-prosecution agreement. An Ericsson subsidiary, Ericsson Egypt, pleaded guilty to conspiracy to violate the anti-bribery provisions of the FCPA.
As well as the fines, the agreement requires Ericsson to retain an independent compliance monitor for at least three years.
Steve Peikin, co-director of the SEC enforcement division, said: ‘As we allege in our complaint, Ericsson engaged in an egregious bribery scheme for years, spanning multiple continents, by surreptitiously using slush funds and funnelling money through sham intermediaries.
‘The remedial measures required by our settlement, including the appointment of an independent compliance monitor, reflect the commission’s commitment to preventing these serious violations of our laws.’