Ericsson Pleads Guilty to FCPA Violations in $1 Billion Settlement

Swedish telecom giant Telefonaktiebolaget LM Ericsson has pleaded guilty to violating the Foreign Corrupt Practices Act (FCPA), in a $1 billion settlement with the United States Department of Justice (DOJ). The settlement relates to a series of improper payments made by Ericsson to foreign officials around the world, as well as attempts to cover up those payments. Additionally, a subsidiary of Ericsson, Ericsson Egypt Ltd., also pleaded to additional charges.

The FCPA makes it illegal for any United States citizen or company, as well as any company which has securities (such as stocks or bonds) that are traded in the United States, to bribe foreign government officials in furtherance of their business interests. It also requires companies under its jurisdiction to maintain certain transparency standards, and to keep proper financial records when dealing in foreign jurisdictions. The purpose of the FCPA is to keep US companies (and companies that do business in the United States) from engaging in dishonest business practices when they are outside normal federal jurisdiction.

The settlement relates to FCPA violations in five different countries, including China, Indonesia, Kuwait, Vietnam and Djibouti. The settlement states that Ericsson was attempting to dominate the international market, using illicit payments as part of a broader strategy to increase its control in those countries where it engaged in bribery. Additionally, when Ericsson was informed of potential FCPA violations, it refused to correct its behavior, or to give transparency on its practices as required by the FCPA. However, it is now cooperating with investigators, and has agreed as part of the settlement to retain an independent compliance monitor for three years.

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