In an announcement on Friday, the U.S Department of Justice revealed that the Swedish multinational networking and telecommunications company, Ericson, has shown willingness to pay more than $1 billion to resolve the corruption charges that highlight the company to have been involved in bribing the government officials.
Ericsson Was Involved In Bribing The Government Officials In Vietnam, China, and Djibouti
According to the Justice Department, Ericsson was involved in bribing government officials in Vietnam, China, and Djibouti. The total charges on the Swedish telecommunications company include over $520 million of a criminal penalty and an additional $540 million that is payable to the Securities and Exchange Commission (SEC) of the United States of America.
Ericsson admitted that it has been in violation of the Foreign Corrupt Practices Act (FCPA) since as early as the year 2000. The company accepted responsibility for falsifying records and offering bribes to the government officials to have the violation go unnoticed. As per the Justice Department, the lack of internal accounting controls also contributed to a violation of the FCPA.
In a conference call, CEO Borje Ekholm stated on Saturday:
“Certain employees in some markets, some of whom were executives in those markets, acted in bad faith and knowingly failed to implement sufficient controls. I view what has happened as a completely unacceptable and hugely upsetting chapter of our history”.
It was also revealed that bribes were paid to the government officials via third parties from 2000 to 2016. Pleading guilty, the company was at a high risk of additional sanctions including licence cancelation. The analysts, however, remarked that Ericsson is likely to keep the licence via negotiating waivers.
CEO Borje Ekholm Says That The Company Has Revised Its Anti-Corruption Program
The CEO further highlighted that the company has meticulously revised its anti-corruption program to ensure that such a massive violation of ethics and compliance doesn’t go unnoticed in the future. He also expressed that the company is willing to cooperate with the authorities and pay $1.2 billion to resolve the corruption charges.
Chief Financial Officer, Carl Mellander, also commented on Friday that paying the fine will not hurt the company’s ability to hit its upcoming financial targets.
Ericson’s performance in the stock market has been fairly upbeat in 2019 so far. Having started the year at around 77 SEK, it printed a year-to-date high of around 97 SEK in May. The share prices, however, were reported to have dropped back to the opening level in August. In the past three months, Ericsson has regained much of the loss and is currently settling around 87 SEK.