Despite its best efforts, it seems that Ericsson is continuing to find it difficult to move on from a bribery and corruption scandal that has cast a shadow over the Sweden-based vendor over the past couple of years.

In December 2019, the vendor agreed to pay a fine of $520,650,432 to the US Department of Justice (DoJ) to settle criminal charges. A separate payment of $458,380,000, along with additional interest fees of $81,540,000, went to the Securities and Exchange Commission (SEC) in relation to civil charges.

This so-called deferred prosecution agreement (DPA) relates to the involvement by former Ericsson employees in foreign bribery schemes in China and the Middle East.

Figure 1: On reflection: Ericsson's tussle with the DoJ takes another turn, as the vendor is told it was slow to provide information relating to the US$1bn payment agreement from 2019.
(Source: Ericsson)

According to the DoJ at the time, Ericsson’s corrupt conduct involved high-level executives and spanned 17 years and at least five countries, "all in a misguided effort to increase profits."

However, Ericsson released a terse statement today saying that it received correspondence from the DoJ stating that Ericsson breached its obligations under the DPA by failing to provide certain documents and factual information.

Ericsson is being given the opportunity to explain the nature and circumstances of such breach, as well as the actions it has taken to address and remediate the situation. The vendor admitted that it is premature at this stage to predict the outcome of these developments.

"DoJ has sole discretion under the DPA to determine whether a breach occurred," the vendor said, and confirmed that it intends to cooperate fully.

Far-reaching fallout

Even if Ericsson manages to avoid this latest curveball, the involvement by former employees in foreign bribery schemes continues to create somewhat unwelcome headlines.

This was illustrated only recently when, in September, US authorities charged a former Ericsson employee with scheming to bribe government officials in the Republic of Djibouti in order to win business with Djibouti Telecom.

The fallout from the whole affair has been far reaching. Ericsson's own response to the scandal included the dismissal of 49 employees it described as the "key individuals," including some high-level executives.

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In May this year, the Swedish Prosecution Authority charged four former Ericsson employees for allegedly bribing Djibouti officials, including the country's Attorney General, in 2011 and 2012, in an effort to win a contract with Djibouti Telecom.

In the same month, Ericsson revealed that it had reached a separate agreement with Nokia for settling a damages claim against Ericsson. At the time, the vendor said the settlement related to the events that were subject to the 2019 resolution with the DoJ and SEC. In total, Ericsson planned to pay a total of €80 million (US$94.6 million) to its Finnish rival.

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— Anne Morris, contributing editor, special to Light Reading