Ericsson (NASDAQ: ERIC) has agreed to pay $1.2 billion to resolve a bribery case brought by U.S. authorities, according to an announcement by the Justice Department. The Swedish telecommunications firm had been charged with conspiracies to violate the 1977 Foreign Corrupt Practices Act (FCPA). An Ericsson subsidiary, Ericsson Egypt Limited, has also pleaded guilty to a charge of conspiring to violate the FCPA. U.S. law allows jurisdiction over corruption by companies whose shares are sold on American stock markets or if the crime impacts the U.S. territory or its financial system.
As part of the settlement, Ericsson must pay a criminal penalty of over $520 million to the Justice Department and a fine of approximately $540 million to the U.S. Securities and Exchange Commission (SEC). The company will also add an independent monitor to ensure its compliance with anti-bribery laws. The settlement had been expected. In September, Ericsson said it had set aside $1.2 billion to cover U.S. penalties.
Ericsson’s chief executive officer Borje Ekholm said in a phone interview, “This is a reflection of some hugely embarrassing and unacceptable behavior in the past, and of course that is something we as a company are ashamed of and I personally am ashamed of. But the settlement also allows us to put an end to a very long and wide-ranging process, so now we can move forward and build a much stronger company for the future.”
The prosecutors alleged that Ericsson took part in a bribery scheme between 2000 and 2016 that spanned Asia and the Middle East. The Swedish company reportedly used third-party agents and consultants to make payments to government officials in Djibouti, China, Vietnam, Indonesia and Kuwait, in an attempt to strengthen its position in the telecommunications industry. U.S. Attorney Geoffrey Berman of the Southern District of New York said in a statement, “Through slush funds, bribes, gifts, and graft, Ericsson conducted telecom business with the guiding principle that money talks.”