Sweden’s Ericsson exposed for bribery in Vietnam, Indonesia

Sweden's Ericsson Exposed For Bribery In Vietnam, Indonesia

Swedish mobile telecoms equipment maker Ericsson has been found violating the US Foreign Corrupt Practices Act (FCPA) and the company’s very own, internal Code of Business Ethics by resorting to bribery in six countries globally, namely Vietnam, Indonesia, China, Djibouti, Kuwait and Saudi Arabia.

This is the result of extensive investigations by the US Securities and Exchange Commission and the Department of Justice over Ericsson’s compliance with the FCPA, covering the period between 2013 and 2017. The two authorities are in charge because Ericsson has American depositary shares listed at the Nasdaq in New York, besides its shares in Stockholm.

The company said it estimated a monetary sanction of $1 billion to settle the investigations, with additional related costs taking the total to $1.2 billion.

Details about the extent of the bribery were not given, but insiders point at the close relationship to Ericsson to foreign governments and state-related telecom corporations, namely in Vietnam and Indonesia.

In Vietnam, Ericsson has been involved in the showcasing and testing of the 5G mobile phone standard in cooperation with the Ministry of Information and Communication and the country’s Authority of Radio Frequency Management in strong competition to China’s Huawei. It is also supplying Viettel Group, Vietnam’s largest mobile carrier owned by the defense ministry, and has delivered 4G technology to MobiFone, owned by the government-controlled Committee for State Capital Management.

In Indonesia, Ericsson has a long-lasting presence and built up the first GSM network in the 1990s. In the period covered by the US investigation, Ericsson remained largest supplier of Indonesia’s largest mobile telecom service provider Telkomsel, majority owned by state-backed Telkom Indonesia. Ericsson is also interested in bagging orders for its 5G equipment in a race between Chinese counterpart Huawei and Finnish equivalent Nokia in the nation of 264 million.

According to whistleblowers, Ericsson paid hundreds of million bribes not only in the above listed countries. They allege that Ericsson has been using various sinister methods to obtain contracts, operating through middlemen and with secretive bank accounts and offshore shell companies to transfer money to government officials and ministers in various nations globally. In Southeast Asia, Ericsson allegedly paid bribes also in Malaysia, where it works with Telekom Malaysia and XL Axiata, and the Philippines, where it works with Globe Telecom and Smart Communications .

Ericsson in a statement to the US investigation said it has been “a failure not to react to red flags and inadequate internal controls which enabled a limited number of employees to actively circumvent internal controls for illegitimate purposes.”

The company now in its corporate governance guidelines says that is acknowledged the fact that “corruption is harmful for many reasons, as a considerable obstacle to economic and social development because it undermines fair competition, impedes innovation, raises costs and poses serious legal and reputational consequences.”

The company says it was “committed to winning business on merit, ability and fairness and acting vigorously to correct any irregularities we encounter.”

As a result of the US probe, the firm has disciplinary measures, including the dismissal of 49 involved employees.

“It is clear that we failed in our execution, and I feel personally very upset to find the company in this position,” Ericsson CEO Borje Ekholm said in conference call with analysts and investors.

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Swedish mobile telecoms equipment maker Ericsson has been found violating the US Foreign Corrupt Practices Act (FCPA) and the company's very own, internal Code of Business Ethics by resorting to bribery in six countries globally, namely Vietnam, Indonesia, China, Djibouti, Kuwait and Saudi Arabia. This is the result of extensive investigations by the US Securities and Exchange Commission and the Department of Justice over Ericsson's compliance with the FCPA, covering the period between 2013 and 2017. The two authorities are in charge because Ericsson has American depositary shares listed at the Nasdaq in New York, besides its shares in Stockholm....

Sweden's Ericsson Exposed For Bribery In Vietnam, Indonesia

Swedish mobile telecoms equipment maker Ericsson has been found violating the US Foreign Corrupt Practices Act (FCPA) and the company’s very own, internal Code of Business Ethics by resorting to bribery in six countries globally, namely Vietnam, Indonesia, China, Djibouti, Kuwait and Saudi Arabia.

This is the result of extensive investigations by the US Securities and Exchange Commission and the Department of Justice over Ericsson’s compliance with the FCPA, covering the period between 2013 and 2017. The two authorities are in charge because Ericsson has American depositary shares listed at the Nasdaq in New York, besides its shares in Stockholm.

The company said it estimated a monetary sanction of $1 billion to settle the investigations, with additional related costs taking the total to $1.2 billion.

Details about the extent of the bribery were not given, but insiders point at the close relationship to Ericsson to foreign governments and state-related telecom corporations, namely in Vietnam and Indonesia.

In Vietnam, Ericsson has been involved in the showcasing and testing of the 5G mobile phone standard in cooperation with the Ministry of Information and Communication and the country’s Authority of Radio Frequency Management in strong competition to China’s Huawei. It is also supplying Viettel Group, Vietnam’s largest mobile carrier owned by the defense ministry, and has delivered 4G technology to MobiFone, owned by the government-controlled Committee for State Capital Management.

In Indonesia, Ericsson has a long-lasting presence and built up the first GSM network in the 1990s. In the period covered by the US investigation, Ericsson remained largest supplier of Indonesia’s largest mobile telecom service provider Telkomsel, majority owned by state-backed Telkom Indonesia. Ericsson is also interested in bagging orders for its 5G equipment in a race between Chinese counterpart Huawei and Finnish equivalent Nokia in the nation of 264 million.

According to whistleblowers, Ericsson paid hundreds of million bribes not only in the above listed countries. They allege that Ericsson has been using various sinister methods to obtain contracts, operating through middlemen and with secretive bank accounts and offshore shell companies to transfer money to government officials and ministers in various nations globally. In Southeast Asia, Ericsson allegedly paid bribes also in Malaysia, where it works with Telekom Malaysia and XL Axiata, and the Philippines, where it works with Globe Telecom and Smart Communications .

Ericsson in a statement to the US investigation said it has been “a failure not to react to red flags and inadequate internal controls which enabled a limited number of employees to actively circumvent internal controls for illegitimate purposes.”

The company now in its corporate governance guidelines says that is acknowledged the fact that “corruption is harmful for many reasons, as a considerable obstacle to economic and social development because it undermines fair competition, impedes innovation, raises costs and poses serious legal and reputational consequences.”

The company says it was “committed to winning business on merit, ability and fairness and acting vigorously to correct any irregularities we encounter.”

As a result of the US probe, the firm has disciplinary measures, including the dismissal of 49 involved employees.

“It is clear that we failed in our execution, and I feel personally very upset to find the company in this position,” Ericsson CEO Borje Ekholm said in conference call with analysts and investors.

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