US charges former Ericsson employee over bribery scheme

Federal indictment charges former employee for alleged role in a scheme to pay about $2.1 million in bribes.

Anne Morris, Contributing Editor, Light Reading

September 9, 2021

3 Min Read
US charges former Ericsson employee over bribery scheme

Old sins have long shadows, so the saying goes. Sweden-based Ericsson is certainly finding this to be the case as involvement by former employees in foreign bribery schemes continues to create somewhat unwelcome headlines.

In the latest development, US authorities have just charged a former Ericsson employee called Afework "Affe" Bereket, a dual citizen of Ethiopia and Sweden, with scheming to bribe government officials in the Republic of Djibouti in order to win business with Djibouti Telecom. The charges relate to the former employee's alleged role in a scheme to pay about $2.1 million in bribes and conspiring to launder funds to promote the scheme.

The defendant remains at large, the document adds. Bereket is charged with one count of conspiracy to violate the Foreign Corrupt Practices Act and one count of conspiracy to commit money laundering. If convicted of both counts, he faces a maximum penalty of 25 years in prison.

Although the charges relate to a former employee and not to Ericsson itself, the overall affair remains a source of considerable embarrassment for the Swedish vendor.

"We want individuals responsible for breaches of compliance and ethical standards to be held accountable for their actions. We are cooperating with the relevant authorities, including the ongoing enforcement investigation in Sweden, whilst evaluating options for civil actions. We have taken steps to protect our ability to take such action at a future date," the company subsequently said in a statement.

Dodgy dealings

According to court documents, Bereket allegedly engaged in the scheme between 2010 and January 2014. During that time, he served as the account manager for the Horn of Africa, a region that included Djibouti, while on a long-term assignment for Ericsson in Africa.

According to the indictment, Bereket participated in a scheme to bribe two high-ranking officials in Djibouti's executive branch and a high-level executive at Djibouti's state-owned telecommunications company to obtain a contract with Djibouti Telecom valued at about €20.3 million.

Furthermore, Bereket and others are alleged to have caused an Ericsson subsidiary to enter into a sham contract with a consulting company and approve fake invoices to conceal the bribe payments. Bereket is also said to have caused Ericsson to transfer the funds to and through bank accounts in the US.

High cost

For its part, Ericsson has already paid a heavy price for shady business practices by employees in China and the Middle East, coughing up a total of $1.06 billion in fines and other payments.

In 2019, the vendor agreed to pay a fine of $520,650,432 to the 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.

The fallout 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.

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

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About the Author(s)

Anne Morris

Contributing Editor, Light Reading

Anne Morris is a freelance journalist, editor and translator. She has been working in the telecommunications sector since 1996, when she joined the London-based team of Communications Week International as copy editor. Over the years she held the editor position at Total Telecom Online and Total Tele-com Magazine, eventually leaving to go freelance in 2010. Now living in France, she writes for a number of titles and also provides research work for analyst companies.

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