Ericsson said corruption investigations into the company by the US Securities and Exchange Commission (SEC) and Department of Justice (DoJ) are ongoing and that the company will be taking a provision of SEK 12 billion (over USD 1.2 billion) in the third quarter to cover potential fines and costs. The company estimates potential monetary sanctions at USD 1 billion, with other related costs coming on board. There is also the question of reputational harm, which could have a “material” adverse impact on the business, the company said.
Ericsson said the process to find a resolution is still ongoing and that it has always cooperated with the US authorities. The company noted that the investigations span a period to the first quarter of 2017 and revealed breaches in the company’s Code of Business Ethics and the US Foreign Corrupt Practices Act in six countries, namely China, Djibouti, Indonesia, Kuwait, Saudi Arabia and Vietnam.
The company has been under investigation since 2016 by the SEC and 2015 by the DoJ for compliance with the Foreign Corrupt Practices Act. Ericsson said the breaches were the result of a failure to react to red flags and to inadequate internal controls. It has since taken a number of disciplinary measures and acted to address its shortcoming.
