Telecoms giant Ericsson kept records about possible bribery schemes locked away in safes and basement cabinets while company lawyers withheld “key details” from an explosive report alleging possible payoffs by the Swedish firm to terrorists in Iraq US court documents show.
Documents filed by the US Justice Department earlier this month in federal court in New York also say Ericsson employees failed to disclose evidence of corrupt payments contained in USB drives for six years, despite an ongoing criminal investigation.
The latest revelations come as Ericsson, a key player west’s war with china on the future of global communications, is Willing to plead guilty to previous bribery charges in federal court on March 21.
The company had earlier this month agreed to pay a $206.7 million fine for violating its 2019 deferred prosecution agreement with the Justice Department, which prosecutors in China, Indonesia, Kuwait, Djibouti and Vietnam between 2000- Called a “year-old campaign of corruption”. 2016. A similar investigation by the US Securities and Exchange Commission found corrupt activities by Ericsson in Saudi Arabia.
Under the 2019 settlement, Ericsson paid $1 billion and pledged to end corruption and report any wrongdoing to the US government. But Ericsson broke his promises by hiding allegations of bribery in at least three countries, including Iraq.
What is really strange is that the most important issue in any bribery investigation is the failure to know that hard copy documents exist in the basement of a building. These failures further damage the company’s reputation and beg credibility that they are just a mistake. — Corporate corruption expert Michael Volkov
According to legal expert Mike Kohler, the total settlement amount is now $1.27 billion – the second largest in the 45-year history of the Foreign Corrupt Practices Act. FCPA Professor Website.
Michael Volkov, a white-collar attorney who writes about corporate corruption and compliance, said the Ericsson case “reads like an internal investigation horror show.”
“There are enough failings here to make the definition of negligence ring hollow,” he told the ICIJ. “What is truly strange is the failure to know that hard copy documents exist in the basement of a building on the most important issue in any bribery investigation. These failures further damage the reputation of the company and beg the credibility that they There is only one mistake.
March 2 plea deal The ICIJ probe was sparked by Revealing that Ericsson paid hundreds of millions of dollars in questionable payments over nearly a decade to keep its business afloat in war-torn Iraq.
of ICIJ ericsson list check, based on a leaked internal report, found that Ericsson funded slush funds, foreign trips for defense officials and payments to corporate executives and possibly Islamic State group terrorists through intermediaries. The ICIJ found that the company sought permission from ISIS to smuggle equipment into ISIS-controlled areas and ignored frantic internal warnings, putting the lives of workers and civilians at risk.
“No family should have to go through what we have,” said Art Sotloff, the father of 31-year-old journalist Steven Sotloff. The Sotloff family is one of 528 families of killed or injured civilians and US military members who have sued Ericsson for allegedly aiding and abetting ISIS and other terrorist groups.
Steven was abducted in August 2013 while on a reporting trip to Syria. More than a year later, ISIS released a video of Steven, bound and kneeling in an orange jumpsuit, being beheaded by a masked ISIS executioner.
“As a journalist, Steven wanted nothing more than to shine a light on the suffering and injustice in the region,” Art Sotloff told ICIJ. “The purpose of our lawsuit against Ericsson is accountability. As Steven’s family, it is our hope that the government will thoroughly investigate allegations of protection payments made to ISIS by any international corporations, including Ericsson.
an Ericsson contractor whose kidnapping detected The leaked internal report states that he never received an apology from the company. The contractor, who is named in the company report but asked to be identified only as Affan, was assigned to do fieldwork for telecommunications in the ISIS-controlled city when a trio of hooded militants He was taken hostage. The engineer told journalist Amir Mousavi, “The company has not contacted me in any way.” Affan, now 34, still fears for his safety and struggles to break out of his captivity. “The ISIS takeover continued for years because of funding by multiple parties, including Ericsson,” Affan said.
Ericsson denies making payments to any terrorist organization. In a federal court filing, the company said the lawsuit brought by the Sotloffs and other families is built on “intimidation and speculation.” Chief executive officer Borje Ekholm said in a statement on 2 March that the guilty plea and fine meant that “the infringement matter is now settled” and that Ericsson is “a very different company today.”
Telecom still facing the US government Test on its operations in Iraq, which is likely to include a review of questions raised by the ICIJ about the firm’s contacts with ISIS. And experts say the guilty plea could lead to a review of public contracts or conflict with bank loans.
Ryan Sparacino, an attorney representing US terror victims, said Ericsson’s guilty plea is just the beginning of a long accountability process for the company. “This process will include civil claims against Ericsson by American victims of ISIS as well as, it is expected, strict criminal charges against Ericsson by the United States Department of Justice for Ericsson’s egregious misconduct in Iraq,” Sparacino said. Reported to ICIJ and its Lebanon based. Partner, Daraz Media.
In Iraq, a spokesman for the Ministry of Justice told Daraj that the government is investigating whether Ericsson committed crimes against the Iraqi people and whether a lawsuit for compensation should be filed.
In addition to reviving corruption charges, Ericsson’s plea agreement has reignited controversy over the growing global practice. ICIJ probe exposed in December Giving leniency deals to multinationals for criminal wrongdoing.
Although the Biden administration has vowed to get tough on corporate crime, prosecutors have yet to hold any Ericsson executive responsible for decades of corruption.
The Justice Department declined to comment for this story. It said earlier this month that Ericsson broke its promises to clean up its act and now prosecutors face “a huge price for its continued wrongdoing”.
Experts on corporate misconduct, however, argue that Ericsson got off lightly.
“We still don’t know the extent of the wrongdoing, or who was responsible for it, and we may never know,” said Texas A&M law professor Peter Reilly, who compared the combined effect to Ericsson’s 2019 Postponed prosecution agreement and plea deals this month over “speeding tickets.”
Volkov, the corporate compliance expert, agreed that the $206.7 million fine seems “pretty low”, especially for a company that has already paid $1 billion. “It doesn’t sound like a sledgehammer to me,” Volkov told ICIJ, adding that the Justice Department is “talking tough and making policy changes” regarding corporate law enforcement, “but I haven’t seen follow through. ” ,
In documents filed earlier this month with Ericsson’s plea agreement, the Justice Department said the company’s failure to disclose corrupt practices “prevents the United States from bringing certain allegations against certain individuals.”
In the Djibouti bribery case, the DOJ convicted Ericsson of taking 10 years to disclose May 2011 emails between two unnamed Ericsson executives who planned payoffs to win telecom contracts. In the China plan, Ericsson did not turn over a February 2018 email alleging that senior executives had approved “very large” improper payments to third-party agents, and that top managers may have denied access to the US. Conspired to withhold that information from the authorities.
The Justice Department said in a court filing earlier this month that Ericsson’s former outside counsel provided only “generalized information” two weeks before the company signed its deferred prosecution agreement in December 2019, for the telecom firm’s activities in Iraq. disclosed.
Both the lawyers and Erickson stopped telling the Justice Department about possible bribes to ISIS until they learned of the ICIJ’s investigation in February 2022 – more than two years later.
Neither the Justice Department nor Ericsson identified the attorneys who withheld the information.
The Justice Department said Ericsson also finalized its internal Iraq report five days after signing the 2019 deferred prosecution agreement and “did not update the United States on the findings and conclusions of the investigation despite being required to do so”. “
But when the ICIJ contacted the Justice Department seeking comment about the company’s possible payoffs to ISIS, Ericsson contacted federal authorities and, through a new outside attorney, fully disclosed the details of the report, the department said.
The lawsuit, filed on behalf of Steven Sotloff and other American terrorist victims, alleges that Ericsson authorized security payments to terrorists for financial gain. “Erickson prioritized profits over everything else, including any risk that its substantial payments to violent terrorists would encourage violent terrorism,” the complaint said.
In a statement to the ICIJ, Ericsson spokeswoman Christophe Adshej said a company review last year indicated that Ericsson did not pay or was responsible for payments to any terrorist organization. The company did not say whom it interviewed or whether it planned to make public any new reports about its Iraq operations.
The critical data that Ericsson failed to disclose included thousands of hard copy records potentially critical to government investigations, according to a recent Justice Department filing, including agreements with third parties Invoices and due diligence files were included. The records were located in locked safes and filing cabinets in secure storage areas in the basements of various buildings at the company’s headquarters in Sweden.
The government said the hidden USB drive also contained records of third-party payments and agreements, as well as who approved and signed those agreements and who approved the payments. The Justice Department did not identify the Ericsson employees who intercepted the thumb drive.
“Those materials contained information relevant to the United States’ investigation,” the Justice Department wrote in an annex to Ericsson’s recent plea agreement. “Certain LM Ericsson employees and now former executives, as well as former outside counsel, knew about these records and understood that they were required to produce them in the United States… These disclosure failures, including those containing key evidence, contains at least hundreds of documents due to bribery, books and records, and internal control schemes that have affected the ongoing criminal investigation of the United States.”
The DOJ is indicating that companies can continue to violate the law with only minor consequences – a system that favors companies and their profits over the rule of law and the public welfare. -Attorney Peter Reilly
Reilly, a law professor, said the case shows “why big companies love deferred prosecution agreements and don’t really care if they violate them.” They said that not only did Ericsson pay a fine that was only a fraction of its profits, but individual wrongdoers escaped punishment and, like the earlier deferred prosecution agreement, was negotiated behind closed doors without oversight. .
In fact, Reilly said, the court filing consists of a three-page letter from prosecutors to the judge — a script of sorts with questions and comments for the judge during next week’s sentencing proceedings.
“The DOJ is indicating that companies can flout the law with only modest consequences – a system that favors companies and their profits in favor of the rule of law and the public welfare,” he said.