The Justice Department’s complaint alleges that Ericsson paid bribes to secure telecom infrastructure contracts in Mexico.
Ericsson, a Swedish telecommunications company, was accused of breaching its settlement with the US Department of Justice after it allegedly paid $1.2 million to secure business in China and other countries.
According to Ericsson AB, US authorities have decided that the Swedish telecom corporation broke the conditions of a $1.06 billion settlement deal made in 2019 over charges of bribery in five nations.
The US Justice Department wrote to the Stockholm-based corporation, claiming that it had broken the agreement by failing to submit certain papers and information connected to the settlement.
Ericsson said that it will continue to work with the Justice Department and that it would be given the chance to reply to the department’s letter. A representative for the department refused to comment.
The corporation reached an agreement with the Justice Department in 2019 to settle bribery claims that allegedly happened in Djibouti, China, Vietnam, Kuwait, and Indonesia between 2000 and 2016.
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The arrangement, known as a deferred prosecution agreement, delayed criminal allegations of conspiracy to violate the Foreign Corrupt Practices Act for three years in exchange for Ericsson implementing specific measures and cooperating with prosecutors.
Ericsson Egypt Ltd., a subsidiary, also admitted to conspiring to break the anti-bribery statute.
Ericsson also reached a separate deal with the US Securities and Exchange Commission on charges that it bribed officials in Saudi Arabia, China, and Djibouti via third parties. The fines issued under the two agreements were among the most draconian ever imposed for FCPA infractions.
The Department of Justice has issued public warnings about the repercussions of breaking the conditions of a deferred prosecution agreement on a few occasions, although such violations are uncommon.
The letter to Ericsson comes after a top Justice Department official cautioned earlier this month that breaking such agreements might result in harsher penalties than those initially committed upon.
“We need to make sure that people who profit from such an agreement fulfill their obligations,” said John Carlin, a senior deputy attorney general’s office official. “If you don’t, you may anticipate significant consequences.”
Ericsson has emerged as one of the United States’ champions in the effort to prevent Chinese corporations like Huawei Technologies Co. from developing 5G technology throughout the globe.
Due to their strong ties with the Chinese government and the possible backdoor access they may give to their telecom networks, US authorities have claimed that Huawei and other Chinese businesses constitute a threat to US national security. Huawei has denied that its equipment will be used for spying.
As part of its 2019 deal with US authorities, Ericsson was compelled to hire a third-party monitor. Andreas Pohlmann, a Frankfurt-based compliance expert who formerly worked as chief compliance officer of Siemens AG and as a monitor in a bribery case involving VEON Ltd, was appointed in June 2023 as a result of the mandate.
Mr. Pohlmann’s duties include assessing Ericsson’s compliance with the conditions of its deferred prosecution agreement and implementing changes to the company’s compliance program.
Dylan Tokar can be reached at [email protected].
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