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Ericsson “Ripple Effects”

Ripple

Prior posts hereherehere, and here covered the 2019 Foreign Corrupt Practices Act enforcement action against Ericsson resolved through a deferred prosecution agreement; how the DOJ in 2021 accused Ericsson of breaching its DPA obligations; recent reports suggesting that “Ericsson may have made payments to the ISIS terror organization to gain access to certain transport routes in Iraq;” and the recent release by the International Consortium of Investigative Journalists of the “Ericsson List.”

As highlighted here, most recently Ericsson disclosed: “On March 1, 2022, the DOJ informed Ericsson that the disclosure made by the company prior to the DPA about its internal investigation into conduct in Iraq in the period 2011 until 2019 was insufficient. Furthermore, it determined that the company breached the DPA by failing to make subsequent disclosure related to the investigation post-DPA.”

This post highlights certain ripple effects from the recent activity.

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Ericsson’s $97 Million Ripple

Ripple

Foreign Corrupt Practices Act settlement amounts are one obvious consequence of FCPA non-compliance and tend to generate the most headlines.

However, as has been discussed on these pages for years  including in this article “FCPA Ripples”, settlement amounts are only one consequence of the overall financial ramifications of FCPA scrutiny and enforcement.

As highlighted in this prior post, in late 2019 Swedish telecom company Ericsson (a company with American Depositary Shares traded in the U.S.) resolved a $1.06 billion net FCPA enforcement action concerning conduct in Djibouti, China, Vietnam, Kuwait, Indonesia, and Saudi Arabia.

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SQM’s $62.5 Million Ripple

Ripple

Foreign Corrupt Practices Act settlement amounts are one obvious consequence of FCPA non-compliance and tend to generate the most headlines. However, as has been discussed on these pages for years  including in this article “FCPA Ripples”, settlement amounts tend to be a relatively modest consequence of the overall financial ramifications of FCPA scrutiny and enforcement.

Pre-enforcement action professional fees and expenses are often 3-5 times (and sometimes higher) the actual FCPA settlement amount and post-enforcement action professional fees and expenses quickly add up as well.

In addition, many instances of FCPA scrutiny result in shareholder litigation – whether a derivative action against officers and directors for alleged breaches of fiduciary duty and/or a securities fraud action.

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From The Dockets

Judicial Decision

This post summarizes a strange state law claim filed by a former Walmart attorney and recent decision by a federal court judge concluding that resolving a Foreign Corrupt Practices Act enforcement action through a deferred prosecution agreement does not constitute a conviction.

Walmart Matter

Recently Shane Perry (a former Walmart attorney who worked on Walmart’s internal FCPA investigation in Mexico in 2011 and later became the Ethics Officer for Walmart de Mexico) filed this lawsuit in Arkansas state court claiming that on July 6, 2017 “he was terminated in a ruthless fashion based on information carelessly gathered and processed at the orders of senior management for punishment and retaliation.”

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