STOCKHOLM, Sept. 26, 2019 /PRNewswire/ -- As previously
disclosed, Ericsson (NASDAQ: ERIC) has been co-operating
voluntarily since 2013 with an investigation by the United States
Securities and Exchange Commission (SEC) and, since 2015, with an
investigation by the United States Department of Justice (DOJ) into
Ericsson's compliance with the U.S. Foreign Corrupt Practices Act
(FCPA) and the process is still ongoing. The investigation covers a
period ending Q1 2017 and revealed breaches of the Company's Code
of Business Ethics and the FCPA in six countries: China, Djibouti, Indonesia, Kuwait, Saudi
Arabia and Vietnam.
The company previously communicated that the resolution of the
investigations will result in material financial and other
measures. While Ericsson cannot comment in detail on the ongoing
process with the U.S. authorities, the Company can with current
visibility now estimate the cost and thus make a provision, which
will impact the third quarter 2019 results by SEK 12 b. The provision constitutes the Company's
current estimate of expenditure related to resolving the U.S.
investigations, of which the combined monetary sanctions from SEC
and DOJ is estimated at USD 1 b., and
the remainder pertains to other costs related to resolving the
investigation. The provision will be booked as Other Operating
Expenses in the income statement of Segment Emerging Business and
Other.
In the course of the investigations, the Company identified
breaches of its Code of Business Ethics and the FCPA. It is the
Company's assessment that the breaches are the result of several
deficiencies, including a failure to react to red flags and
inadequate internal controls which enabled a limited number of
employees to actively circumvent internal controls for illegitimate
purposes. Disciplinary measures, including terminations where
appropriate, have been taken against identified individuals
determined to have breached the Code of Business Ethics. Ericsson
has acted to address shortcomings and is significantly enhancing
its Ethics & Compliance program, to ensure that the Company is
equipped to do business the right way. As the process is still
ongoing, Ericsson is not able to, and will not make, any further
comments.
Börje Ekholm, President and CEO, says: "Over the last two years
we have operationally turned around our company and established a
strong portfolio and competitive cost structure. With today's
announcement we confront another legacy issue and take the next
step in resolving it. We have to recognize that the Company has
failed in the past and I can assure you that we work hard every day
to build a stronger Ericsson, where ethics and compliance are
cornerstones in how we conduct business. Over the past two years,
we have made significant investments in our ethics and compliance
program including our investigative capabilities and have taken
actions against employees who have transgressed our values and
standards."
Ronnie Leten, Chairman of the Board of Directors, says: "This
has been a formative process for the company. We have worked
closely with the Executive Team in enhancing Ericsson's ethics and
compliance program. We are impressed by their conviction in
addressing shortcomings and are confident in their ability to
deliver on our strategy."
Based on a thorough internal and external assessment of its
Ethics and Compliance program, the Company has implemented
significant reforms to address identified gaps and further
strengthen the program. This work is still ongoing, and Ericsson
will remain relentless in striving to improve and safeguard a
strong ethical and compliance culture throughout the company.
Addition to Risk Factors (as published in Annual and
Quarterly Reports):
In addition to the estimated costs related to resolving the
investigations, Ericsson could experience reputational harm and
other negative consequences as a result of these matters. For
example, customers or suppliers may reconsider their relationships
with the Company, or governmental and regulatory authorities in the
relevant jurisdictions or elsewhere could seek to penalize the
Company or place restrictions on its operations. Harm to
reputation, or any resulting disruption in customer or supplier
relationships, could have a material adverse impact on Ericsson's
business.
About the Foreign Corrupt
Practices Act (FCPA)
The Foreign Corrupt Practices Act (FCPA) is a United States law consisting of both
anti-bribery provisions and accounting transparency provisions.
Anti-Bribery Provisions: It is unlawful to provide
anything of value to a foreign government official in order to
obtain or retain business.
Accounting Transparency Provisions: Every company listed
on a U.S. stock exchange must maintain accurate and detailed books
and records; maintain an internal control system to ensure accuracy
of those books and records, and prevent illegal activity. Failure
to meet these provisions, characterized as "books and records" and
"internal controls", can result in charges regardless of whether
there is evidence of bribery.
Conference call for journalists, analysts and
investors
The company will hold a conference call for journalists,
financial analysts and investors. Börje Ekholm, President and CEO,
Carl Mellander, CFO, and Xavier
Dedullen, Chief Legal Officer will make brief comments and take
questions.
The conference call will begin Thursday,
September 26, at 09:00 CEST
(08:00 BST in London, 03:00
EDT in New York and 16:00
JST in Tokyo).
To join the conference call, please phone one of the following
numbers:
Sweden: +46 856642651
(Toll-free Sweden: 0200883685)
International/UK: +44 3333000804 (Toll-free International/UK:
08003589473)
US: +1 6319131422 (Toll-free US: +18558570686)
PIN code: 77148375#
Replay:
Replay of the conference calls will be available from about one
hour after it has ended.
Sweden replay number: +46 8-519
993 85
International replay number: +44 (0) 333 300 0819
PIN code: 301296217#
NOTES TO EDITORS:
FOLLOW US:
Subscribe to Ericsson press releases here.
www.twitter.com/ericsson
www.facebook.com/ericsson
www.linkedin.com/company/ericsson
MORE INFORMATION AT:
Ericsson Newsroom
FOR FURTHER INFORMATION, PLEASE CONTACT
Contact person
Peter Nyquist, Head of Investor Relations
Phone: +46 10 714 64 99
E-mail: peter.nyquist@ericsson.com
Additional contacts
Stella Medlicott, Senior Vice President, Head of
Marketing & Corporate Relations
Phone: +46 10 713 65 39
E-mail: media.relations@ericsson.com
Investors
Stefan Jelvin, Director, Investor
Relations
Phone: +46-10-714-20-39
E-mail: stefan.jelvin@ericsson.com
Rikard Tunedal, Director, Investor Relations
Phone: +46-10-714-54-00
E-mail: rikard.tunedal@ericsson.com
Media
Ola Rembe, Vice President, Head
of Brand & Communications
Phone: +46-10-719-97-27
E-mail: media.relations@ericsson.com
Corporate Communications
Phone: +46-10-719-69-92
E-mail: media.relations@ericsson.com
About Ericsson
Ericsson enables communications service providers to capture the
full value of connectivity. The company's portfolio spans Networks,
Digital Services, Managed Services, and Emerging Business and is
designed to help our customers go digital, increase efficiency and
find new revenue streams. Ericsson's investments in innovation have
delivered the benefits of telephony and mobile broadband to
billions of people around the world. The Ericsson stock is listed
on Nasdaq Stockholm and on Nasdaq New York. www.ericsson.com
Forward-looking statements
This release includes forward-looking statements, including
statements reflecting management's current views relating to the
growth of the market, future market conditions, future events,
financial condition, and expected operational and financial
performance, including, in particular the following:
– Our goals, strategies, planning assumptions and operational or
financial performance expectations
– Industry trends, future characteristics and development of the
markets in which we operate
– Our future liquidity, capital resources, capital expenditures,
cost savings and profitability
– The expected demand for our existing and new products and
services as well as plans to launch new products and services
including research and development expenditures
– The ability to deliver on future plans and to realize
potential for future growth
– The expected operational or financial performance of strategic
cooperation activities and joint ventures
– The time until acquired entities and businesses will be
integrated and accretive to income
– Technology and industry trends including the regulatory and
standardization environment in which we operate, competition and
our customer structure.
The words "believe," "expect," "foresee," "anticipate,"
"assume," "intend," "likely," "projects," "may," "could," "plan,"
"estimate," "forecast," "will," "should," "would," "predict,"
"aim," "ambition," "seek," "potential," "target," "might,"
"continue," or, in each case, their negative or variations, and
similar words or expressions are used to identify forward-looking
statements. Any statement that refers to expectations, projections
or other characterizations of future events or circumstances,
including any underlying assumptions, are forward-looking
statements.
We caution investors that these statements are subject to risks
and uncertainties many of which are difficult to predict and
generally beyond our control that could cause actual results to
differ materially from those expressed in, or implied or projected
by, the forward-looking information and statements.
Important factors that could affect whether and to what extent
any of our forward-looking statements materialize include, but are
not limited to, the factors described in the section "Risk Factors"
in the latest interim report, and in "Risk Factors" in the Annual
Report 2018.
These forward-looking statements also represent our estimates
and assumptions only as of the date that they were made. We
expressly disclaim a duty to provide updates to these
forward-looking statements, and the estimates and assumptions
associated with them, after the date of this release, to reflect
events or changes in circumstances or changes in expectations or
the occurrence of anticipated events, whether as a result of new
information, future events or otherwise, except as required by
applicable law or stock exchange regulations.
This information is information that Telefonaktiebolaget LM
Ericsson is obliged to make public pursuant to the EU Market Abuse
Regulation. The information was submitted for publication, through
the agency of the contact person set out above at 01:00 CEST on September
26, 2019.
This information was brought to you by Cision
http://news.cision.com
https://news.cision.com/ericsson/r/ericsson-estimates-costs-for-resolving-investigations-by-u-s--authorities-at-sek-12-b--and-makes-pro,c2918213
The following files are available for download:
https://mb.cision.com/Main/15448/2918213/1113774.pdf
|
Ericsson estimates
costs for resolving investigations by U.S. authorities at SEK 12 b.
and makes provision in third quarter
|