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A Closer Look At The “Factual Basis For Breach” In The Ericsson Matter

Closer Look

This prior post covered the 2019 Foreign Corrupt Practices Act enforcement action against Ericsson. The enforcement action concerned conduct in Djibouti, China, Vietnam, Kuwait, Indonesia, and Saudi Arabia and included a DOJ and SEC component. The DOJ matter involved a one count criminal information against Ericsson subsidiary Ericsson Egypt Ltd. charging conspiracy to violate the FCPA’s anti-bribery provisions resolved through a plea agreement and a criminal information against Ericsson charging conspiracies to violate the FCPA’s anti-bribery, books and records, and internal controls provisions resolved through a deferred prosecution agreement. The DOJ matter was resolved through payment of a $520 million criminal penalty.

As highlighted in this prior post, in 2021 the DOJ suggested that Ericsson was in breach of its DPA obligations.

Recently, the DOJ announced that “Ericsson has agreed to plead guilty and pay a criminal penalty of more than $206 million after breaching a 2019 Deferred Prosecution Agreement (DPA).” (See here for the prior post).

The plea agreement contains an attachment titled “Factual Basis for Breach” and it makes for an interesting read. Among other things, the DOJ does assert any additional criminal conduct by Ericsson, nor does the DOJ assert that any of Ericsson’s alleged breaches prevented it from addressing the substantive conduct at issue in the 2019 enforcement. In addition, certain of the blame (seemingly much blame) for Ericsson’s alleged breaches appears to be the result – per the DOJ – of decisions or omissions by Ericsson’s “prior outside counsel.” Although “prior outside counsel” is not identified in the recent “Factual Basis for Breach,” Ericsson’s outside counsel in connection with the 2019 FCPA enforcement action was Simpson Thacher & Bartlett LLP attorneys Cheryl Scarboro, Joshua Levine and Diana Wielocha.

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Assistant AG Polite Calls Prosecutors “Community Problem-Solvers” – Announces Yet Additional Changes To DOJ Policy

Polite

Last week, Kenneth Polite (DOJ Assistant Attorney General -Criminal Division) gave this speech in which he called prosecutors “community problem-solvers” and announced (yet additional) changes to DOJ policy.

Specifically, Polite announced “significant changes” to how the DOJ “consider[s] a corporation’s approach to the use of personal devices as well as various communications platforms and messaging applications, including those offering ephemeral messaging.”

In addition, Polite described how the DOJ has “updated its policies concerning corporate compensation systems” and issued a “revised memorandum on the selection of monitors in Criminal Division matters” including that “any submission of a monitor candidate by the company and selection of a monitor candidate by the Criminal Division should be made in keeping with the department’s commitment to diversity, equity, and inclusion.”

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Ericsson Pleads Guilty And Pays An Additional $206 Million In Connection With Its 2019 FCPA Enforcement Action After DOJ Alleges Breach Of The 2019 DPA

ericsson

This prior post covered the 2019 Foreign Corrupt Practices Act enforcement action against Ericsson.

The enforcement action concerned conduct in Djibouti, China, Vietnam, Kuwait, Indonesia, and Saudi Arabia and included a DOJ and SEC component. The DOJ matter involved a one count criminal information against Ericsson subsidiary Ericsson Egypt Ltd. charging conspiracy to violate the FCPA’s anti-bribery provisions resolved through a plea agreement and a criminal information against Ericsson charging conspiracies to violate the FCPA’s anti-bribery, books and records, and internal controls provisions resolved through a deferred prosecution agreement. The DOJ matter was resolved through payment of a $520 million criminal penalty.

As highlighted in this prior post, in 2021 the DOJ accused Ericsson of breaching its DPA obligations.

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Ericsson Books $220 Million For DPA Breach And Monitor Extension

ericsson

Prior posts here and here have covered the 2019 Foreign Corrupt Practices Act enforcement action against Ericsson resolved through a deferred prosecution agreement and how the DOJ in 2021 accused Ericsson of breaching its DPA obligations.

This recent post also highlighted how the monitor – imposed in connection with the 2019 enforcement action – was extended for an additional year.

Recently, Ericsson disclosed:

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Ericsson Attempts To Put A Positive Spin On Monitor Extension (Even Though It Is Not A Positive Development For The Company)

positivespin

As highlighted in this prior post, in December 2019 Swedish telecom company Ericsson (a company with American Depositary Shares traded in the U.S.) resolved a net $1.06 billion Foreign Corrupt Practices Act enforcement action – the largest of all-time – concerning conduct in Djibouti, China, Vietnam, Kuwait, Indonesia, and Saudi Arabia.

The DOJ prong of the enforcement action involved a one count criminal information against Ericsson subsidiary Ericsson Egypt Ltd. charging conspiracy to violate the FCPA’s anti-bribery provisions resolved through a plea agreement and a criminal information against Ericsson charging conspiracies to violate the FCPA’s anti-bribery, books and records, and internal controls provisions resolved through a deferred prosecution agreement. The DPA required Ericsson to retain an independent compliance monitor for a three year term. As a condition of resolving a parallel SEC matter, Ericsson was also required to retain a monitor for a three year period.

In October 2021, the DOJ accused Ericsson of breaching its DPA obligations. (See here).

Recently, Ericsson announced “that it has agreed with the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) to extend the term of the Company’s Independent Compliance Monitor for one year, to June 2024.”

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