Ericsson to pay $206 million for breaching US prosecutor deal

(Reuters) -Sweden’s Ericsson will pay a $206 million fine and plead guilty after violating a 2019 deal with U.S. prosecutors that required the telecoms firm to properly disclose information on its activities in Iraq, China and Djibouti.

The plea agreement with the U.S. Justice Department follows a scandal over possible payments made to the Islamic State militant group through its activities in Iraq.

The Justice Department said in a statement the telecommunications firm fell short in disclosing activities after entering a deferred prosecution agreement (DPA) in 2019 to resolve a probe into years of alleged corruption in China, Vietnam and Djibouti.

Under the DPA, the Justice Department had agreed to hold off prosecuting Ericsson for three years if it paid a steep penalty, implemented “rigorous internal controls”, complied with U.S. laws and cooperated fully on any ongoing investigations.

“Ericsson breached the DPA by violating the agreement’s cooperation and disclosure provisions,” the Justice Department said in a statement.

Though such agreement breaches have been historically rare, the Justice Department has warned a number of companies under President Joe Biden as it cracks down on corporate misconduct and repeat offenders.

The company will be required to serve a probation term through June 2024, and agreed to a one-year extension of an independent compliance monitor, the department added.

Ericsson previously paid a total criminal penalty of more than $520 million and agreed to the imposition of an independent compliance monitor for three years, the Justice Department said on Thursday, referring to the 2019 settlement.

“This resolution is a stark reminder of the historical misconduct that led to the DPA. We have learned from that and we are on an important journey to transform our culture,” Ericsson CEO Borje Ekholm said in a statement.

Ericsson last year disclosed that a 2019 internal probe had identified payments designed to circumvent Iraqi customs at a time when militant organizations, including Islamic State, controlled some routes.

The internal probe did not conclude the firm made or was responsible for any payments to any terrorist organization, and the firm continues to probe the matter “in full cooperation with the DOJ and the U.S. Securities and Exchange Commission,” Ericsson said.

(Reporting by Chris Prentice, Rami Ayyub and Kanishka Singh; Editing by Sonali Paul and Edwina Gibbs)