U.S. prosecutors have determined that Ericsson AB has violated the terms of a $1.06 billion settlement agreement reached in 2019 over allegations of bribery in five countries, the Swedish telecom company said Friday.
The Stockholm-based company received correspondence from the U.S. Justice Department stating that the company had breached the agreement by failing to provide certain documents and information related to the settlement.
Ericsson said it would continue to cooperate with the Justice Department and would have the opportunity to respond to the department’s letter. A department spokesman declined to comment.
The company in 2019 entered into a deal with the Justice Department to resolve allegations of bribery that stretched between 2000 and 2016 that the agency said occurred in Djibouti, China, Vietnam, Kuwait and Indonesia.
The deal, known as deferred prosecution agreement, suspended criminal charges of conspiracy to violate the Foreign Corrupt Practices Act, under the condition that Ericsson undertake certain reforms and continue cooperating with prosecutors for a three-year period.
A subsidiary, Ericsson Egypt Ltd., also pleaded guilty to conspiring to violate the antibribery law.
Ericsson also entered into a parallel agreement with the U.S. Securities and Exchange Commission over allegations that it had used third parties to bribe officials in Saudi Arabia, China and Djibouti. The penalties imposed under the two deals were among the highest ever levied for violations of the FCPA.
The Justice Department has occasionally issued public warnings about the consequences of violating the terms of a deferred prosecution agreement, but such breaches are rare.
The letter to Ericsson comes after a senior Justice Department official earlier in October said that breaching such agreements could lead to punishment more severe than was originally agreed to.
“We need to make sure that those who get the benefit of such an arrangement comply with their responsibility.” said John Carlin, a senior member of the deputy attorney general’s office. “If not, you should expect to see serious repercussions.”
Ericsson has emerged as one of the U.S.’s champions in a race to head off the development of 5G technology world-wide by Chinese companies such as Huawei Technologies Co.
U.S. officials have alleged that Huawei and other Chinese companies pose risks to U.S. national security due to their close relationships with the Chinese government and the potential backdoor access they can provide to their telecom networks. Huawei has denied the allegation that it would use its technology to spy.
Ericsson was required to appoint a third-party monitor as part of its 2019 agreement with U.S. prosecutors. The requirement led to the appointment in June 2020 of Andreas Pohlmann, a Frankfurt-based compliance specialist who previously served as chief compliance officer of Siemens AG and as a monitor in a bribery case involving VEON Ltd.
Mr. Pohlmann’s responsibilities include the evaluation of Ericsson’s compliance with the terms of its deferred prosecution agreement, as well as the implementation of improvements to its compliance program.