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Ericsson fined for dodgy Djibouti dealings and warned over Iraqi indiscretions

$206 million for breaching 2019 settlement – and DoJ warns it won't be afraid to do this again

The US Department of Justice has slapped Ericsson with a $206 million fine for breaching terms of the deferred prosecution deal it struck in 2019 when the Swedish outfit was found to have spent years using illegal business practices.

The 2019 deal related to bribes Ericsson arranged in Djibouti, plus breaches of accountancy rules codified in the US's Foreign Corrupt Practices Act across its operations in China, Indonesia, Kuwait and Vietnam.

Ericsson admitted to malfeasance and coughed up more than a billion dollars to Uncle Sam – $521 million in fines and $458 million in other sanctions, plus $80 million of interest – under a Deferred Prosecution Agreement (DPA) that gave the networking biz time to get its house in order.

The DPA included an "If you mess up again, you'll only make things worse for yourself" caveat.

Ericsson messed up again.

"Following the 2019 resolution, Ericsson breached the DPA by failing to truthfully disclose all factual information and evidence related to the Djibouti scheme, the China scheme, and other potential violations of the FCPA's anti-bribery or accounting provisions," states a DoJ announcement.

The DoJ is also miffed that Ericsson "failed to promptly report and disclose evidence and allegations of conduct related to its business activities in Iraq that may constitute a violation of the FCPA."

Failing to disclose that info "prevented the United States from bringing charges against certain individuals and taking key investigative steps."

Ericsson has responded to the news with a statement in which CEO Börje Ekholm declared "Taking this step today means that the matter of the breaches is now resolved."

Except, that is, for the Iraq bits – which are still under investigation after allegations emerged that Ericsson had paid bribes to arrange transport through areas controlled by Islamic State. Ericsson believes its actions did not result in payments being made to terrorist organizations.

Which could of course be totally true. Those payments just went to people who happened to be able to get things done in areas controlled by terrorists. Who knows where the money ended up?

The DoJ's statement makes an example of Ericsson, pointing out that the Department is unafraid of revisiting and relitigating its agreements.

The US currently operates strict bans on export of certain technologies to Russia and China, in addition to existing bars on exports to Iran and North Korea.

But the Department of Commerce is worried some countries and entities offer "evasion routes" that facilitate gray market exports. Alan Estevez, undersecretary of commerce for industry and security at the Department of Commerce, recently said closing off those routes is on the to-do list.

Perhaps Ericsson's public spanking will make some think twice about using "evasion routes." ®

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