Ericsson Has Set Aside Hundreds Of Millions Of Dollars Because It Allegedly Breached Its Deferred Prosecution Agreement

Nicola Sharp of financial crime specialists Rahman Ravelli considers the company's situation.

Ericsson has put aside $220 million in an attempt to resolve alleged breaches of its 2019 deferred prosecution agreement.

The Swiss telecommunications company concluded a DPA with the US Department of Justice (DOJ) over allegations it had bribed officials in Djibouti, China, Vietnam, Indonesia and Kuwait. As part of the settlement, in addition to a $1 billion payment, the company had to appoint an independent compliance monitor for three years.

But the DOJ has notified Ericsson that the company did not disclose sufficient information about its conduct in Iraq between 2011 to 2019. The DOJ considers this a breach of the agreement.

It was found that Ericsson covered up years of bribery and fraud in Iraq, including paying Islamic State millions of dollars to allow the company to operate in regions controlled by the terrorist group. This allowed the company to make hundreds of millions of dollars but led to it being sued by victims of ISIS and al-Qaeda.

In order to resolve the matter, Ericsson is cooperating with the DOJ. It is expecting to pay around $220 million, which includes the costs for continued monitoring until June 2024. The exact amount is not yet confirmed as discussions are ongoing between the parties. In addition, the US Securities and Exchange Commission is also investigating this misconduct and may impose its own fines.

Ericsson's current situation highlights the need to ensure that internal investigations are carried out thoroughly - otherwise there can be serious implications. It also emphasises that full co-operation and disclosure to the authorities is required when a company enters into a DPA.

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Ms Nicola Sharp
Rahman Ravelli Solicitors
36 Whitefriars Street
London
EC4Y 8BQ
UK
Tel: [phone]
E-mail: [e-mail]
URL: www.rahmanravelli.co.uk

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