videoSwedish telecommunications company Ericsson will fork over more than $1 billion to resolve investigations by the Department of Justice and Securities and Exchange Commission into its improper business practices, the DOJ announced Friday.
Continue Reading Below
Subsidiaries of the company, Ericsson, are in trouble for how they conducted business in countries from Kuwait to China. Ericsson subsidiary Ericsson Egypt Ltd. pleaded guilty on Friday to violating the Foreign Corrupt Practices Act by making and improperly recording millions of dollars’ worth of payments globally.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| ERIC | ERICSSON (LM) | 9.23 | +0.09 | +0.98% |
“Today, Swedish telecom giant Ericsson has admitted to a years-long campaign of corruption in five countries to solidify its grip on telecommunications business,” U.S. Attorney Geoffrey S. Berman said in a statement. “Through slush funds, bribes, gifts, and graft, Ericsson conducted telecom business with the guiding principle that ‘money talks.’ Today’s guilty plea and surrender of over a billion dollars in combined penalties should communicate clearly to all corporate actors that doing business this way will not be tolerated.”
Ericsson will pay a $520 million criminal penalty as part of a deferred prosecution agreement with the DOJ.
Ericsson CEO Borje Ekholm. (Janerik Henriksson/TT via AP)
The company will also pay approximately $540 million to the SEC.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
“I am upset by these past failings,” Ericsson CEO Börje Ekholm said in a statement. “Reaching a resolution with the US authorities allows us to close this legacy chapter. We can now move forward and build a stronger company.”
The DOJ alleged a laundry list of wrongdoing by Ericsson subsidiaries in order to gain an edge with state-owned telecommunications companies. Ericsson subsidiaries made payments through sham contracts, funneled money into Chinese travel expense accounts to pay for gifts and entertainment for foreign officials and improperly recorded payments to consulting companies in its books, officials alleged.