ARTICLE
21 October 2019

Ericsson Has Earmarked $1.23 Billion As The Possible Total Cost Of Investigating And Settling Bribery Allegations

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Rahman Ravelli Solicitors

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Nicola Sharp of business crime solicitors Rahman Ravelli explains why such allegations can bring other expensive burdens after a settlement has been reached.
United Kingdom Criminal Law

Nicola Sharp of business crime solicitors Rahman Ravelli explains why such allegations can bring other expensive burdens after a settlement has been reached.

The Swedish telecom giant Ericsson has set aside $1.23 billion as it aims to settle criminal and civil probes by US authorities into bribery allegations. Ericsson Chief Executive Borje Ekholm has said that the settlements are still being finalised with the US authorities.

The US investigations into alleged breaches of the Foreign Corrupt Practices Act (FCPA) began in 2013 with enquiries made by the Securities and Exchange Commission (SEC). Two years later, the US Justice Department began its own investigation. The following year, Ericsson started to improve its ethics and compliance program.

Ericsson has said that the investigations relate to violations of US foreign bribery law and the company's own code of business ethics in China, Djibouti, Indonesia, Kuwait, Saudi Arabia and Vietnam; with the company failing to follow up warning signs and having poor internal controls.

The $1.23 billion set aside is for an estimated $1 billion in combined penalties in expected settlements with the Justice Department and SEC with the rest covering costs related to the investigations. Ericsson Chief Legal Officer Xavier Dedullen has said the company has disciplined 65 employees in relation to the FCPA violations, of which 49 are no longer working for the company.

Once the settlements have been finalised, it is unlikely to be the end of the matter for Ericsson. Further costs could be involved if an independent monitor is imposed as part of the settlements to oversee the company's compliance reforms. Further resources may also be needed to develop and improve compliance procedures.

While settlements with the likes of the SEC and other authorities can involve large financial penalties, it should be remembered that the costs of the initial investigations and any resulting compliance measures can increase the overall bill significantly. This is why it is so important for companies to ensure they have stringent compliance procedures in place when it comes to bribery and corruption – and that these are monitored regularly and updated when necessary.

Read the guide: Bribery And Corruption - Responding To National And International Investigations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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