STOCKHOLM, Dec. 6, 2019 /PRNewswire/ -- Ericsson
(NASDAQ: ERIC) today announced the resolution of the previously
disclosed investigations by the U.S. Department of Justice (DOJ)
and the Securities and Exchange Commission (SEC) regarding the
Company's compliance with the U.S. Foreign Corrupt Practices Act
(FCPA). While the DOJ and SEC conduct separate
investigations, the same facts have been shared by Ericsson with
both authorities.
The resolution relates to historical FCPA breaches ending Q1
2017. While the Company had a compliance program and a supporting
control framework, they were not adequately implemented.
Specifically, certain employees in some markets, some of whom were
executives in those markets, acted in bad faith and knowingly
failed to implement sufficient controls. They were able to
enter into transactions for illegitimate purposes and, together
with people under their influence, used sophisticated schemes in
order to hide their wrongdoing.
The resolution marks the end of the FCPA-related investigations
into Ericsson and its subsidiaries undertaken by the DOJ and the
SEC.
The DOJ proceeding is a criminal enforcement action and the SEC
proceeding is a civil enforcement action. The agencies
resolve their investigation independently of one another using
their own discretion and applying different standards of
proof. As a result, the DOJ and SEC have come to different
conclusions based on the same facts.
DOJ resolution
Ericsson has agreed to enter into a Deferred Prosecution
Agreement (DPA) with the DOJ to resolve criminal charges relating
to violation of bribery provision of the FCPA in Djibouti. The DPA also resolves criminal
charges relating to violations of the accounting provisions of the
FCPA in China, Djibouti, Indonesia, Kuwait, and Vietnam. In connection with
the matter in Djibouti, Ericsson's
Egyptian subsidiary pled guilty to bribery today. As part of the
resolution Ericsson will pay a fine of USD
520,650,432.
SEC resolution
Ericsson has agreed with the SEC to the entry of a judgment to
resolve claims related to allegations of violations of the
accounting provisions of the FCPA in China, Djibouti, Indonesia, Kuwait, Saudi
Arabia and Vietnam and of
the bribery provisions of the FCPA in Djibouti, China and Saudi Arabia. As part of the
resolution, Ericsson will pay financial sanction of
USD 458,380,000, plus pre-judgement interest of USD 81,540,000.
In parallel to the investigations, the Company has since 2016,
together with external expert advisors, conducted a comprehensive
review of the Company's anti-corruption program. Based on this
review, Ericsson has been taking significant steps to improve its
Ethics and Compliance program.
Pursuant to the resolutions, Ericsson has agreed to continue
enhancing its internal controls and its compliance program.
Börje Ekholm, President and CEO, says: "I am upset by these past
failings. 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 settlement with the SEC and DOJ shows that we have not
always met our standards in doing business the right way. This
episode shows the importance of fact-based decision making and a
culture that supports speaking up and confronting issues. We have
worked tirelessly to implement a robust compliance program. This
work will never stop."
Ronnie Leten, Chair of the Board of Directors, says: "Ultimately
we can only be successful if we have an entrenched ethics and
compliance culture. I am confident that with the significant
steps already undertaken we are better equipped to execute on our
strategy without compromising on our values."
DETAILS OF IMPROVED ETHICS AND COMPLIANCE PROGRAM
Improvements to Ericsson's Ethics and Compliance program
include:
- Additional resources for the Compliance and Investigations
functions.
- Reorganizing the allegation management process to ensure a
centralized, professional intake of allegations, conduct of
investigations and remediation.
- Refining the risk assessment process to consist of a tiered
approach and systematic risk mitigation methodology.
- Enhancing the due diligence process of third-parties, including
the overall monitoring of third-party engagements.
- Introducing more sophisticated analytic tools to better
identify and prevent high-risk transactions and engagements.
- Enhancing the ethics and compliance vetting process for senior
leaders.
- Refreshing compliance training modules for employees, including
workshops and face-to-face training for employees in exposed
roles.
- Enhancing the internal anti-corruption and compliance related
awareness campaigns (including the Company's zero tolerance for
corruption).
INVITATION TO MEDIA AND ANALYST CALL
The company will hold a conference call for journalists,
financial analysts and investors. Börje Ekholm, President and CEO,
Carl Mellander, Chief Financial
Officer, and Xavier Dedullen, Chief Legal Officer will make brief
comments and take questions.
The conference call will begin December
7, at 9:30 AM CET
(8:30 AM GMT in London and 3.30 AM
EST in New York).
To join the conference call, please phone one of the following
numbers:
Sweden: +46 (0)8 566 42651
(Toll-free Sweden: 0200 883
685)
International/UK: +44 (0)333 300 0804 (Toll-free
International/UK: 0800 358 9473)
US: +1 631 913 1422 (Toll-free US: +1 855 857 0686)
PIN code: 80473445 #
A live audio webcast of the conference call will be available at
www.ericsson.com/investors and www.ericsson.com/newsroom
Replay:
A replay of the conference call will be available from about one
hour after the conference call has ended until December 14, 2019.
Sweden replay number: +46 (0) 8
519 993 85
International/UK replay number: +44 (0) 333 300 0819
US replay number: +1 (866) 931 1566
PIN code replay: 301305281#
An on-demand webcast will be available at
www.ericsson.com/investors and www.ericsson.com/newsroom
approximately one hour after the webcast ended.
NOTES TO EDITORS
For media kits, backgrounders and high-resolution photos, please
visit www.ericsson.com/press
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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.
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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
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Ericsson reaches
resolution on U.S. FCPA investigations
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MORE INFORMATION AT:
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media.relations@ericsson.com
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SOURCE Ericsson