Telecom Ericsson Will Be Monitored For An Extra Year Following Us Breach of Corruption Settlement

The corporation breached a $1 billion deferred prosecution agreement with the Justice Department twice, allowing it to avoid criminal charges in connection with a worldwide bribery conspiracy.

Ericsson will undergo a further year's monitoring by a required compliance monitor imposed as part of a 2019 international bribery settlement.

In a press announcement issued on Wednesday, the Swedish telecoms behemoth stated that it has agreed to the extension with the US Justice Department and the Securities and Exchange Commission.

In a $1 billion agreement with the US Justice Department, Ericsson committed to report misconduct and submit to audits and the supervision of an independent monitor, admitting to allegations that the corporation plotted to make illicit payments to obtain business in five nations. The agreement also settled SEC claims of a bribery plot involving a sixth country.

However, Ericsson has broken the agreement twice, the first time in October 2021 for withholding information, according to the business. And again earlier this year, following the Ericsson List inquiry.

Beyond the countries included by the DOJ agreement, reporting by the International Consortium of Investigative Journalists and 30 media partners uncovered a pattern of bribes, internal corruption probes, and crimes in more than a dozen others, including Iraq.

The DOJ informed the telecom company that it had violated the corruption settlement for the second time by failing to fully disclose wrongdoing in Iraq.

The monitorship, which was supposed to last three years and began in 2020, will now last until June 2024.

The business "remains committed to collaborating with the DOJ in connection with the settlement of the breach notice," according to a statement from Ericsson.

The revelation was made on the heels of a new investigation demonstrating how corporations frequently break the terms of deferred and non-prosecution agreements as the anti-corruption enforcement policy has been embraced by countries around the world.

A corruption pattern

The Justice Department previously stated that the bribery plan included by the 2019 agreement was aimed at officials in Djibouti, China, Vietnam, Kuwait, and Indonesia over a 17-year period.

In exchange for the company's promise to adopt reforms reviewed by an independent monitor, the billion-dollar settlement, known as a deferred prosecution agreement, delayed criminal accusations of conspiracy to violate the Foreign Corrupt Practices Act.

Under the settlement, an Ericsson subsidiary, Ericsson Egypt, was allowed to plead guilty to violating anti-bribery regulations. In the United States, only one Ericsson employee, former account manager Afework Bereket, was charged.

The Ericsson List investigation, which was publicised in February of this year, was based on internal papers that revealed that in 2019, Ericsson investigated workers' alleged fraudulent actions in 15 countries dating back to 2011.

According to the released documents, Ericsson sought authorization from the terrorist organisation known as the Islamic State to work in an ISIS-controlled city in Iraq. Over nearly a decade, the corporation paid to transfer equipment into ISIS regions and made dubious payments to finance slush funds, trips overseas for defence officials, and payoffs to corporate leaders and possibly terrorists through middlemen.

The documents depict a practise of bribery and corruption so widespread, and company monitoring so lax, that millions of dollars in payments went unaccounted for - all while Ericsson laboured to maintain and build essential cellular networks in one of the world's most corrupt countries.

The Ericsson List also cast a light on the DOJ and its contentious reliance on deferred prosecution deals, a type of probation that critics argue does little to prevent corporate misconduct.

This year, the probe resulted in a slew of worldwide legal and financial ramifications for the telecom behemoth.

The business's stock price has fallen, its senior legal officer has resigned, investors and terrorism victims are suing the corporation, Swedish authorities and the US Securities and Exchange Commission have launched investigations, and further financial penalties are expected from the DOJ.

In a press release, Ericsson stated that the extended monitorship would be used "to ensure these changes are engrained in our business," as well as to improve risk management and compliance controls.

DOJ officials have withheld monitoring reports about firms' compliance with settlement agreements. 

"We want to get this right, and to be a true industry leader, we have to conduct our business correctly," said CEO and President Börje Ekholm in a statement.

By fLEXI tEAM