Ericsson admits breaking DoJ deal over Iraq corruption claims

Telecoms group’s admission comes days after revelations about alleged bribes given to Islamic State

Last modified on Wed 2 Mar 2022 10.16 EST

The Swedish telecoms group Ericsson broke a formal agreement with US prosecutors by withholding evidence about its involvement in corruption, the firm has announced.

The US Department of Justice had notified Ericsson that the firm has failed, as required, to hand over details of alleged corruption in Iraq to DoJ prosecutors.

The admission comes days after it was revealed that Ericsson may have channelled cash to Islamic State terrorists and had made suspicious payments totalling millions of dollars to sustain its business in Iraq between 2011 and 2019.

The announcement on Wednesday came as Ericsson struggled to contain a growing controversy over its alleged misconduct. It is the second time the multinational has been found to have broken its agreement with the DoJ.

Ericsson’s shares have lost nearly a third of their value since further revelations about wrongdoing emerged last month.

The latest disclosures originate from an investigation by the International Consortium of Investigative Journalists (ICIJ). It obtained confidential documents that recorded the results of internal inquiries commissioned by Ericsson into alleged corruption by the company around the world.

The documents reveal how Ericsson is alleged to have helped pay bribes to IS in order to continue selling the company’s services after the terrorism group seized control of large parts of Iraq.

The leaked documents were shared with ICIJ’s media partners, including the Guardian, the BBC and the Washington Post, and were published on Sunday.

On Tuesday, the DOJ told Ericsson it believed the firm had broken the terms of a settlement reached in 2019.

Under the settlement, Ericsson paid $1bn (£750m) to end a corruption investigation by the DoJ. The firm admitted it had paid tens of millions of dollars in corrupt payments through slush funds between 2000 and 2016 to win contracts in five countries.

As part of what is known as a deferred prosecution agreement (DPA), Ericsson avoided court action provided it had disclosed all relevant information about its wrongdoing to the DoJ. Under the terms of the DPA, the department can launch a new prosecution if it believes Ericsson has not come clean about corruption allegations.

The DoJ informed Ericsson on Tuesday that the information the firm had shared with prosecutors about alleged misconduct in Iraq between 2011 and 2019 was deemed to be “insufficient”.

Ericsson said the DoJ had “determined that the company breached the DPA by failing to make subsequent disclosure” related to this alleged misconduct since the 2019 agreement.

In its statement, the firm gave no details about the nature of the alleged corruption that had been withheld.

Ericsson said it was “in communication with the DoJ regarding the facts and circumstances of the breach determination” and that it was “committed to cooperating with the DoJ to resolve the matter”.

“At this stage it is premature to predict the outcome of this matter,” the firm added.

In October, the DoJ told Ericsson it had “breached its obligations under the DPA by failing to provide certain documents and factual information”, although no details were made public on that occasion either.

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