Let’s take a look back at the details of this case which illustrates some of the DoJ’s recent decisions in the fight against economic crime.

I. Recognition of Ericsson’s corruptive system

In 2019, Ericsson agreed to pay more than a billion dollars to close the investigations conducted by the US authorities for violation of the Foreign Corrupt Practices Act (FCPA),[2] admitting having put in place with other companies, from the 2000s until 2016, a system consisting in paying bribes, falsifying accounting documents while not implementing adequate internal accounting controls. [3]

Ericsson used intermediaries to pay bribes to foreign officials as well as to manage slush funds not included in the accounting records. These intermediaries were often engaged through fictitious contracts and paid via false invoices inappropriately recorded in the company’s accounts.[4]

The investigation revealed that Ericsson’s subsidiaries succeeded, through this system of bribery of foreign officials, to obtain several highly lucrative contracts with public telecommunications companies in several countries, such as Djibouti, China, Vietnam, Indonesia, Kuwait, or Saudi Arabia. To obtain those contracts, Ericsson inter alia paid, through several intermediaries, for travel and leisure to the benefit of those officials and their family members.[5]

For example, between 2012 and 2013, Ericsson made payments to two Saudi consultants through one of its subsidiaries via fictitious contracts for services never performed. These payments were authorized knowing – or recklessly ignoring – that there was a high probability that at least some of these commissions would be passed on to public officials of Saudi state-owned enterprises to secure telecommunications contracts. The internal procedures put in place by the company were not respected since the prior due diligence mechanism of the group’s counterparties was initiated almost a year after the signing of these fictitious contracts. By paying around $40 million to the two consultants, Ericsson managed to secure nine contracts from Saudi state-owned enterprises with a total value of more than $700 million.[6]

II. Terms of the DPA with the Department of Justice and the Securities and Exchange Commission

In addition to a fine of more than $1 billion, the DPA concluded with the DoJ and the Securities and Exchange Commission[7] (SEC) also requires Ericsson to (i) continue to cooperate with the DoJ in all ongoing investigations and prosecutions relating to its alleged conduct, including those concerning individuals related to this case, (ii) improve its compliance program and (iii) use an independent monitor for three years.[8]

The authorities imposed this very constraining agreement to Ericsson for two reasons: on the one hand, the company did not voluntarily disclose its conduct to the DoJ, and on the other hand, there was an involvement of the group’s senior executives in corrupt practices in several countries. [9] However, the authorities also found that Ericsson cooperated by (i) conducting a thorough internal investigation, (ii) regularly informing the authorities of its progress, (iii) voluntarily making its foreign-based employees available to the authorities for interviews in the United States, (iv) producing numerous documents to the authorities and (v) disclosing certain misconduct of which the DoJ was not yet aware.[10]

III. Violation of the DPA

On October 21, Ericsson, after referring to the DoJ’s correspondence alleging[11] non-compliance with certain obligations under the DPA, indicated having a right of written reply to explain the nature and circumstances of the violation, as well as the measures taken to remedy the situation. [12]

The company also stated that it intended to respond to the DoJ and continue to cooperate in accordance with the terms of the DPA, including the document production requirements.[13]

On several occasions, the DoJ already warned the public about the consequences of violating the terms of a DPA although this situation is in practice particularly rare.[14]

The correspondence addressed to Ericsson comes after a senior DoJ official said in early October 2021 that violating agreements with the DoJ would henceforth have serious repercussions for violators.[15]

This case seems to illustrate the DoJ’s stated willingness to deal severely with breaches of such agreements. This approach echoes Deputy Attorney General Lisa Monaco’s speech, announcing a tougher DoJ approach to fighting economic crime.[16]

Although it is premature at this stage to predict the outcome of this case, it reminds to the various actors (companies, organizations, practitioners) (i) the importance of the effective implementation of a compliance program covering all the activities of an international group as well as (ii) the particular attention that should be paid to the monitoring of the obligations imposed by a DPA after its conclusion with the prosecuting authorities.