Ericsson is setting aside $220 million for a potential resolution with the U.S. Department of Justice (DoJ), regarding its latest scandal involving bribery allegations.
In 2019, Ericsson paid more than $1 billion in penalties to resolve bribery and corruption investigations by the DoJ and the Securities and Exchange Commission (SEC) over violations of the U.S. Foreign Corrupt Practices Act. Authorities found Ericsson had made and falsely recorded tens of millions of dollars in bribes as part of a long-running scheme. The penalties pertained to Ericsson activities in six countries: China, Djibouti, Indonesia, Kuwait, Saudi Arabia and Vietnam.
But then, in early 2022, new reports surfaced that Ericsson may have made payments to the ISIS terror organization to gain access to certain transport routes in Iraq. And Ericsson immediately began investigating these allegations.
If the Iraq allegations were proven to be true, they would constitute a breach of a Deferred Prosecution Agreement (DPA) in the 2019 settlement with the DoJ.
Today, Ericsson said it has not reached a resolution with the DoJ regarding the alleged breaches, and discussions are ongoing.
The $220 million charge will be booked in Ericsson’s fourth quarter 2022 financial results, which the company will report next week.
“The company believes that this is a sufficiently reliable estimate of the financial penalty associated with any potential breach resolution, and this provision also includes estimated expenses for the previously announced extended monitorship,” stated Ericsson’s announcement today.
Ericsson says that since 2019 it has taken measures to prevent corruption, overseen by its board of directors, including strengthening its compliance program and internal controls.