LM Ericsson Telephone Company (“Ericsson”) was a multinational networking and telecommunications equipment and services company headquartered in Sweden. Ericsson’s common shares were registered with the SEC and traded on the NASDAQ.
On December 6, 2019, Ericsson entered into a Deferred Prosecution Agreement (DPA) with the DOJ involving FCPA misconduct in several countries. The DPA was part of a global settlement where Ericsson paid approximately $1 billion in sanctions.
In a press release issued on October 22, 2021, Ericsson disclosed that the company had received correspondence from the DOJ stating that the agency had determined that Ericsson breached its obligations under the DPA by failing to provide certain documents and factual information and that Ericsson would have the opportunity to respond in writing to explain the nature and circumstances of the breach.
Ericsson later disclosed that the breach was in reference to misconduct in Iraq that the company had discovered in an internal investigation in 2019. Specifically, in a press release issued on February 15, 2022, Ericsson detailed that this previously undisclosed internal investigation included the conduct of Ericsson employees, vendors and suppliers in Iraq during the period 2011-2019. The investigation found serious breaches of the company's compliance rules and Code of Business Ethics and identified evidence of significant corruption-related misconduct, violations of Ericsson’s internal financial controls, conflicts of interest, non-compliance with tax laws, and obstruction of the investigation. In addition to the corruption-related findings, the company's investigating team also identified payments to intermediaries and the use of alternate transport routes in connection with circumventing Iraqi Customs, at a time when terrorist organizations, including ISIS, controlled some transport routes. Investigators could not determine the ultimate recipients of these payments. Payment schemes and cash transactions that potentially created the risk of money laundering were also identified.
In a 6-K filed on March 2, 2022, Ericsson disclosed that on March 1, the DOJ informed the company that the disclosure made by the company prior to the DPA about its internal investigation into conduct in Iraq was insufficient, and the agency had further determined that the company breached the DPA by failing to make subsequent disclosure related to the investigation post-DPA.
In a 6-K filed on June 9, 2022, Ericsson disclosed that the SEC had notified the company that it had initiated an investigation into the misconduct in Iraq.
In a 6-K filed on July 14, 2022, Ericsson disclosed that it was responding to inquiries from both agencies.
In a company press release issued on December 14, 2022, Ericsson said that it had agreed to a one year extension to the corporate monitorship imposed in the 2019 settlement.
In a 6-K filed on January 12, 2023, Ericsson announced that it had accrued approximately $220 million in anticipation of a resolution with the DOJ for the alleged breaches of the DPA.
On March 2, 2023, the DOJ announced that Ericsson had entered into a new plea agreement over the DPA breach. In all, Ericsson agreed to pay an additional $207 million in fines.
In a 6-K filed on April 21, 2023, Ericsson indicated that the plea agreement it reached with the DOJ only covered the breach of the DPA, so its internal investigation into the Iraqi misconduct continued and the company was still cooperating with both the DOJ and SEC's investigations.
In a 6-K filed on October 15, 2024, Ericsson disclosed that the SEC had informed the company on September 26 that it had closed its investigation and did not intend to bring an enforcement action.
The DOJ investigation is ongoing.
