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Technology / Software / Electronics
Stockholm, Sweden
Nationality of Foreign Officials: Bulgaria, Libya, Poland, Slovenia
Summary of Allegations:
According to press reports from 26 May 2003, the Swiss Federal Public Prosecutor's Office began investigating Ericsson in 2003 for alleged bribery of officials in Bulgaria, Libya, Poland and Slovenia in connection with mobile contracts. The investigation was apparently prompted by reports from Swiss bank UBS after finding CHF 550 million in irregularities in the Company's financial transactions. According to a report from Reuters on 10 September 2003, the Swiss investigators did not find enough evidence to charge Ericsson with bribery.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Unspecified
Nationality of Foreign Officials: China
Summary of Allegations:
In an 11 October 2011 story, the China Times reported that Shen Changfu, former chairman and president of China Mobile Chongqing Branch, was on trial for accusations of bribery. The allegations were that he accepted CNY 36.2 million from Ericsson as well as the Chinese telecommunications supplier Huawei in 1996 when he arranged for Ericsson's facilities to be purchased by the Chongqing Telecom Bureau, which Shen then directed. The CNY 36.2 million bribe represented 2% of the purchase deal, according to the prosecution. Shen was also accused of procuring advantages for members of his family (from Huawei), including a few years of salary for his son, who was employed briefly by Huawei.
Approximate Alleged Payments to Foreign Officials: CNY 36.2 million
Business Advantage Allegedly Obtained: Assistance in selling facilities to the Chongquin Telecom Bureau
Nationality of Foreign Officials: China, Djibouti, Indonesia, Kuwait, Saudi Arabia, Vietnam
Summary of Allegations:
Between 2011 and 2017, Ericsson subsidiaries bribed public officers in Saudi Arabia, China, Djibouti, Vietnam, Indonesia, and Kuwait with about US $62 million to secure contracts with state-owned telecommunications companies, yielding profits amounting to US $427 million.
Ericsson subsidiaries orchestrated the bribery schemes by retaining consultants to funnel money to third parties who then provided a significant portion of the payment to public officials, making use of sham service provider agreements with no services rendered, slush funds, code names, sham transactions, and invoices. The bribes were mischaracterized in Ericsson's books and records as legitimate expenses and consolidated in Ericsson’s financial statements and SEC filings. The responsible subsidiaries and joint ventures included Ericsson (China) Company Ltd., Ericsson (China) Communications Co., Ltd. Ericsson Hong Kong, Nanjing Ericsson Panda Communications Company Ltd, PT Ericsson Indonesia, Ericsson Vietnam Co. Ltd, Ericsson Resource & Competence Center Sdn. Bhd, and Ericsson Egypt Ltd.
Djibouti
In October 2010, Ericsson submitted a bid to a Djibouti state-owned telecommunications company for a large networking contract.
In May 2011, Ericsson signed a contract with the SOE worth US $29 million.
In June 2011, Ericsson's Ethiopia branch signed a consulting agreement with a consulting company in Djibouti owned by the wife of a senior Djibouti official and controlled by this official, with no legitimate services intended but serving as a conduit to funnel bribes to officials with decision-making authority over the bid. Ericsson compiled a due diligence report on the consulting company without disclosing the spousal relationship between the owner and the official. According to an indictment unsealed by the DOJ, the bribery scheme was orchestrated by Ericsson’s former account manager Afework Bereket and others.
Ericsson thereafter received solicitations from the officials to pay the consulting company. Between August 2011 until 2014, it transferred three payments totaling US $2.1 million to the consulting company via multiple agents including Ericsson Egypt Ltd, knowing that the consulting company would pay a substantial portion of the fees to the officials to secure the bid.
In September 2011, Ericsson announced that it had been awarded the networking contract with the SOE.
Saudi Arabia and China
Ericsson's Saudi Arabia branch bribed local telecommunications state-owned entity officials with US $40 million to secure nine contracts from the SOE worth more than US $700 million. Ericsson utilized two local consultants to transfer the bribes and disguised the scheme via sham service contracts. No due diligence was conducted until one year after the service contracts were signed.
Ericsson's branches in Saudi Arabia and China covered leisure travel and entertainment for public officials and their spouses to secure business from the SOEs. The expenses include plane tickets, gifts, spa services, shopping, and lodging, securing business with revenues totaling US $40.54 million from the Saudi SOE, and US $294 million from the China SOE. In China, Ericsson utilized a fake service provider, agents, and a travel agency to funnel the bribes.
Vietnam
Between 2011 and 2015, Ericsson Vietnam and Malaysia hired a consultant in Vietnam connected to local SOEs, with US $4.8 million for purported consulting services with no actual services delivered. Ericsson utilized the consultant only as an intermediary to maintain a slush fund for payments to customers as cash gifts via third parties.
Indonesia
Between 2012 and 2015, Ericsson Indonesia entered into a sham consulting contract with a local consultant paying US $45 million for services never delivered. The consultant was utilized to create a slush fund and transfer the money to third parties to cover customers' entertainment and travel unrelated to business.
Kuwait
In 2011, Ericsson submitted a bid for a radio access network upgrade contract with a state-owned company in Kuwait. It engaged with a Kuwait consultant owned by individuals closely affiliated with a government officer in Qatar for services never delivered.
The consultant then provided Ericsson with inside competitor-bidding information and Ericsson was awarded the contract worth US $182 million in 2012.
In 2013, Ericsson paid the consultant US $450,000 via a sham agreement for sales and marketing support services, which were never rendered.
China
Between 2000 and 2016, Ericsson bribed public officials in China with US $31.5 million via third-party service providers connected to the officials but not providing any legitimate services, in violation of Ericsson's internal policies restricting the use of third party agents.
Approximate Alleged Payments to Foreign Officials: US $62 million
Business Advantage Allegedly Obtained: US $427 million
Nationality of Foreign Officials: Costa Rica
Summary of Allegations:
Transparency International's OECD Anti-Bribery Convention Progress Report 2009 says that Ericsson has been under investigation in Costa Rica for "alleged bribery of officials at the National Institute of Electricity," which is the state-owned Instituto Costarricense de Electricidad ("ICE"). According to Inside Costa Rica's report of 6 October 2004, ICE initiated an investigation into allegations that Ericsson had paid for two ICE officials to travel to Prague. ICE's investigation purportedly determined that the allegations were true, and decided to re-open the bid for 600,000 new cellular phone lines that Ericsson had originally won. Inside Costa Rica reported on 3 June 2005 that Ericsson would proceed with the contract, presumably after having won the bid that was re-opened after ICE's investigation of Ericsson.
Approximate Alleged Payments to Foreign Officials: Travel for two officials to Prague
Business Advantage Allegedly Obtained: Unspecified
Nationality of Foreign Officials: Greece
Summary of Allegations:
Ericsson Microwave Systems, former Greek subsidiary of Ericsson, allegedly paid SEK 116 million (approximately USD 18 million) to a commercial agent, Thomas Liakounakos, which was then used to bribe Greek officials to secure a deal for Ericsson in 1999. Liakounakos allegedly paid bribes to former Greek defense minister Akis Tsochatzopoulos and procurement director Yiannis Sbokos through his company SONAK.
Ericsson Microwave Systems said in a statement that it had paid money to the commercial agent, but did not know what became of it. The Greek order was for the Ericsson airborne surveillance system ERIEYE and was worth SEK 4.9 billion (USD 759 million). Ericsson subsequently sold its defense business to Swedish group Saab.
Approximate Alleged Payments to Foreign Officials: USD 18 million
Business Advantage Allegedly Obtained: Contract for Ericsson's airborne surveillance system worth USD 759 million
Nationality of Foreign Officials: Iraq
Summary of Allegations:
On 2019, Ericsson conducted an internal investigation regarding the conduct of its employees, vendors and suppliers in Iraq between 2011 and 2019. The investigation found serious breaches of the company's compliance rules. The investigation team also found payment schemes and cash transactions that potentially presented a money-laundering risk.
A leak of the 2019 internal investigation, exposes Ericsson’s secret dealings with ISIS in order to work in an ISIS-controlled city, as well as paying to smuggle equipment into ISIS areas on a route known as the “speedway".
The internal investigation also shows that Ericsson's business in Iraq relied on politically connected fixers and unvetted subcontractors.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Unspecified
Nationality of Foreign Officials: Oman
Summary of Allegations:
According to a Thomson Financial News report on 21 November 2007, Swedish Radio released a story alleging that Ericsson had used a Swiss bank account to make payments to an official in Oman in the late 1990s. According to the allegations, the Company made payments totaling SEK 12 million (approximately USD 1.9 million in November 2007) to the account of the Omani official in close proximity to Ericsson's winning bid for mobile network expansion in Oman (worth SEK 300 million). However, the story quoted a Swedish prosecutor as saying that authorities there will not open an investigation of these allegations due to the expiration of the statute of limitations.
Approximate Alleged Payments to Foreign Officials: SEK 12 million (approximately USD 1.9 million)
Business Advantage Allegedly Obtained: Contract for mobile network expansion in Oman worth SEK 300 million
Nationality of Foreign Officials: Romania
Summary of Allegations:
According to a Business New Europe report on 7 November 2012, allegations of bribery in Romania surfaced due to an arbitration case between Ericsson and its former Romania country manager, Thomas Lundin. In the arbitration case, Ericsson accused Lundin of embezzling money from the Company, while Lundin has insisted that the Company's board in Romania knew that the money was in fact given as bribes to Romanian politicians. According to the story, Lundin alleges that USD 7 million was paid to Romanian officials in exchange for the award of a EUR 40 million contract for the "112" national emergency assistance service to Ericsson in 2003.
The Business New Europe article says that Cristian Sima, the owner of a British Virgin Islands investment company called WBS Holding, made public statements in Icelandic media to the effect that Lundin served as a managing partner in WBS Holding and told him that bribes were paid through the accounts of a Romanian journalist at WBS Holding.
The Wall Street Journal reported on 23 May 2013 that the U.S. Securities & Exchange Commission ("SEC") has initiated an investigation into the allegations of bribery in Romania.
Approximate Alleged Payments to Foreign Officials: USD 7 million
Business Advantage Allegedly Obtained: EUR 40 million contract for servicing of the national emergency assistance number
Nationality of Foreign Officials: Russian Federation
Summary of Allegations:
The Local, a Swedish English-language newspaper, reported on 25 November 2004 that Swiss authorities began investigating allegations of a "payment of one billion crowns from Switzerland via Austria to Russia in connection with a railway building project that was never implemented." The current status of this investigation is unclear.
Approximate Alleged Payments to Foreign Officials: SEK 1 billion
Business Advantage Allegedly Obtained: Unspecified
Agencies: China: People's Procuratorate
Results: Prosecution of Individuals
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
Media reports on 18 November 2012 stated that an equipment procurement officer from Ericsson had been questioned by Chinese authorities, as part of the investigation of Li Hua, general manager of the Sichuan office of China Mobile, and Chen Binglan, deputy general manager of the same branch. Li and Chen are in custody. Another Chinese executive, Shen Changfu, former director of the Chongqing Telecom Administration and subsequently general manager of China Mobile Chongqing, was detained in an investigation by the Chinese authorities of procurement contracts with foreign suppliers, including Ericsson. It is unclear whether Ericsson itself is a subject of the Chinese investigation.
Agencies: Costa Rica: National Institute of Electricity
Results:
Year Resolved: 2004
Compliance Monitor:
Ongoing: No
Details:
Transparency International's OECD Anti-Bribery Convention Progress Report 2009 says that Ericsson has been under investigation in Costa Rica for "alleged bribery of officials at the National Institute of Electricity," which is the state-owned Instituto Costarricense de Electricidad ("ICE"). According to Inside Costa Rica's report of 6 October 2004, ICE initiated an investigation into allegations that Ericsson had paid for two ICE officials to travel to Prague. ICE's investigation purportedly determined that the allegations were true, and decided to re-open the bid for 600,000 new cellular phone lines that Ericsson had originally won. Inside Costa Rica reported on 3 June 2005 that Ericsson would proceed with the contract, presumably after having won the bid that was re-opened after ICE's investigation of Ericsson.
Agencies: Greece: Athens Public Prosecutor's Office
Results: Prosecution of Individuals
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
On 11 April 2012, Tsohatzopoulos was arrested on charges of money laundering.
On 2 October 2012, Greek police raided Sbokos' office and residence in Greece. On the same day, Sbokos was arrested for his involvement in kickbacks and money laundering.
On 7 October 2013, following a five-month trial, Tsohatzopoulos was found guilty of setting up a complex money-laundering network to cover the trail of millions of dollars in bribes he's said to have pocketed from government weapon purchases and sentenced to 20 years in prison. In the same trial, 16 other defendants, including Sbokos, Tsohatzopoulos' wife (Vicki Stamati) and daughter (Areti), and several business partners, were also found to have colluded with him to launder the bribe money using a network of offshore companies and property purchases. Sbokos was sentenced to 16 years in prison, both Stamati and Areti to 12.
On 28 September 2015, Liakounakos was arrested and charged with money laundering and bribes in the case of supplying the Greek Armed Force with the radar system ERIEYE of Ericssion. Liakounakos appeared before prosecutor on 29 September 2015 and testified to his role in the scandal before an investigative magistrate on corruption on 2 October 2015. He will remain in custody pending trial.
On 19 June 2016, Ericsson disclosed that seven of its current and former employees have been served with summons in preliminary investigation proceedings by a Greek prosecutor involving allegations of possible corruption. However, they have not been provided with full relevant documentation from the investigation and not yet been questioned by the Greek prosecutor.
Agencies: Internal Investigation
Results:
Year Resolved: 2019
Compliance Monitor:
Ongoing: No
Details:
On February 2022, Ericsson disclosed that in 2019, it conducted an internal probe as a result of unusual expense claims in Iraq, dating back to 2018. The investigation found serious breaches of its compliance rules, as well as payment schemes and cash transactions that potentially presented a money-laundering risk.
The investigators also identified payments to intermediaries and the use of alternate transport routes that aimed to circumvent Iraqi customs at a time when terrorists groups controlled some transport routes. Investigators couldn't determine the ultimate recipients of these payments.
Ericsson indicated that as a result of the investigation, several employees left the company and it stopped working with some third parties.
Ericsson said that due to being under a DPA with U.S. authorities, it couldn't confirm whether or not the 2019 internal investigation was disclosed to the DOJ.
Borje Ekholm (President and CEO of Ericsson Group) said that if new facts come to light, Ericsson will reopen the investigation.
Agencies: Sweden: Prosecution Authority, Anti-Corruption Unit
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
On 12 December 2019, Sweden’s Prosecution Authority confirmed that it launched a preliminary investigation into Ericsson, triggered by information that came to light from its collaboration with the U.S. corruption probe into the company.
On 26 May 2021, a Swedish court indicted four Ericsson employees for bribing Djibouti officials to secure a contract with Djibouti Telecom SA.
On 21 April 2022, Swedish prosecutors indicated that they have opened an investigation regarding the corruption allegations involving Ericsson in Iraq, including the suspected bribes paid to the Islamic State.
Agencies: Switzerland: Federal Public Prosecutor's Office
Results: No Action
Year Resolved: 2003
Compliance Monitor:
Ongoing: No
Details:
According to press reports from 26 May 2003, the Swiss Federal Public Prosecutor's Office began investigating Ericsson in 2003 for alleged bribery of officials in Bulgaria, Libya, Poland and Slovenia in connection with mobile contracts. The investigation was apparently prompted by reports from Swiss bank UBS after finding CHF 550 million in irregularities in the Company's financial transactions. According to a report from Reuters on 10 September 2003, the Swiss investigators did not find enough evidence to charge Ericsson with bribery.
Agencies: Switzerland: Unspecified
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
The Local, a Swedish English-language newspaper, reported on 25 November 2004 that Swiss authorities began investigating allegations of a "payment of one billion crowns from Switzerland via Austria to Russia in connection with a railway building project that was never implemented." The current status of this investigation is unclear.
Agencies: United States: Civil Lawsuit
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
On March 2022, a class-action lawsuit was filed against telecoms OEM Ericsson, its CEO Börje Ekholm, and CFO Carl Mellander over the company's recently-admitted dealings in Iraq.
Ericsson shareholder David Nyy has filed a class action on behalf of anyone that acquired Ericsson securities between April 27, 2017 and February 25, 2022, for violations of the Securities Exchange Act of 1934.
Agencies: United States: Civil Lawsuit
Results:
Year Resolved:
Compliance Monitor:
Ongoing: No
Details:
On 5 August 2022, it was reported that over 500 U.S. service members and civilians who were victims of terrorist attacks and hostage takings from 2005 to 2021, along with the families of those killed in attacks, have filed a lawsuit, in federal court in Washington D.C., against Ericsson based on the company's alleged payment of bribes to al Qaeda and the Islamic State.
Agencies: United States: Department of Justice, United States: Securities and Exchange Commission
Results: Cease-and-Desist Order, Compliance Monitor, Deferred Prosecution Agreement
Year Resolved: 2019
Compliance Monitor: Yes
Ongoing: No
Details:
On 23 May 2013, the Wall Street Journal reported that the SEC has initiated an investigation into the allegations of bribery involving Ericsson in Romania.
On 17 June 2016, Ericsson announced through a press release that Ericsson had received a voluntary request from US authorities to answer questions related to Ericsson's anti-corruption program and questions related to the FCPA. Ericsson is cooperating with the US authorities. SvD Näringsliv reported, on 16 June 2016, that both the SEC and DOJ are investigating Ericsson's activities in China.
On 25 September 2019, Ericsson announced that it had reserved approximately US $1 billion for the resolution of the investigations by the DOJ and SEC.
On 6 December 2019, Ericsson reached a settlement with the DOJ and SEC regarding its violations of the anti-bribery, books and records, and internal controls provisions of the FCPA in Saudi Arabia, China, Djibouti, Vietnam, Indonesia, and Kuwait between 2011 and 2017. Ericsson agreed to pay US $458,380,000 in disgorgement and US $81,540,000 in prejudgment interest to the SEC, and also entered into a three-year deferred prosecution agreement with the DOJ, agreeing to pay a criminal penalty of US $520,650,432 and to maintain an independent compliance monitor. Ericsson Egypt Ltd pleaded guilty to one count of conspiracy to violate the anti-bribery provisions of the FCPA.
On 8 September 2021, a U.S. court unsealed an indictment dated 3 June 2020 regarding Bereket's conspiracy to violate the FCPA and commit money laundering for his role in the above schemes.
On 22 October 2021, Ericsson was notified by the U.S. Justice Department that the company had breached the $1.06 billion settlement agreement by failing to provide certain documents and information related to the settlement. Ericsson said it would continue to cooperate with the Justice Department.
On 02 March 2022, Ericsson provided an update on its Deferred Prosecution Agreement (DPA) with the DOJ. According to the update, the DOJ informed Ericsson on 01 March 2022 that the disclosure made by the company prior to the DPA about its internal investigation into conduct in Iraq in the period 2011 until 2019 was insufficient. Furthermore, it determined that the company breached the DPA by failing to make subsequent disclosure related to the investigation post-DPA.
On 14 December 2022, Ericsson announced that the company will face an additional year's scrutiny from the US-mandated monitor, extending the term of the independent compliance monitor until June 2024.
On 12 January 2023, Ericsson announced that it has booked a USD $219.7 million provision in the fourth quarter of 2022 ahead of a potential resolution to an alleged deal breach with the US DOJ.
On 2 March 2023, the DOJ announced that Ericsson had agreed to plead guilty and pay a criminal penalty of US $206,728,848 after breaching its 2019 Deferred Prosecution Agreement. The criminal penalty includes the elimination of any cooperation credit originally awarded pursuant to the DPA.
Agencies: United States: Securities and Exchange Commission
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
On 9 June 2022 Ericsson disclosed that the US Securities and Exchange Commission (SEC) notified them that it has opened an investigation on the company regarding the matters described in the company's 2019 Iraq investigation report.
Discovery Method: Media or Investigative Report
Details:
Country:
Discovery Method: Discovered from separate investigation
Details:
In 2019, the U.S. corruption probe into Ericsson triggered Sweden Prosecution Authority's preliminary investigation into Ericsson's alleged corruption misconducts.
Country: