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.
Regarding Djibouti, the enforcement action alleged that Ericsson (through certain subsidiaries and agents) provided approximately $2,100,000 in bribe payments to, and for the benefit of, foreign officials in Djibouti, including a high-ranking government official in the executive branch of the Djibouti government who had influence over decisions made by a state-owned telecommunications company and the CEO of the state-owned telecom company, in order to secure an improper advantage in order to obtain and retain business with the Telecom Company and to win a contract valued at approximately €20,300,000 with the Telecom Company.”
In connection with this prong of the Ericsson enforcement action, the DOJ announced yesterday that Afework “Affe” Bereket (pictured – a dual citizen of Ethiopia and Sweden) was criminally charged with one count of conspiracy to violate the FCPA’s anti-bribery provisions and one count of conspiracy to commit money laundering “for his alleged role in a scheme to pay approximately $2.1 million in bribes to high-level government officials in the Republic of Djibouti and conspiring to launder funds to promote the scheme.”
According to the June 3, 2020 indictment, Bereket was an employee of Ericsson Egypt and an agent of Ericsson. From approximately 2010 to 2013, Bereket “was on a long-term assignment with a branch of Ericsson in Africa, where Bereket served as the account manager for the Horn of Africa, a region that included Djibouti.”
In the heading “Overview of the Bribery Scheme,” the indictment alleges:
“From at least in or about 2010 through at least on or about January 31, 2014, Bereket … and others … participated in a scheme to bribe foreign officials in Djibouti in order to obtain and retain business with Telecom Company 1 [described as a wholly state-owned telecommunications company in Djibouti]. Bereket and his co-conspirators corruptly paid and caused to be paid bribes totaling approximately $2.1 million to, and for the benefit of, foreign officials in Djibouti, including Foreign Official 1, Foreign Official 2 [both described as high ranking officials in the executive branch of the government of Djibouti who had influence over decisions made by Telecom Company 1] and Foreign Official 3 [described as a high level executive at Telecom Company 1], in order to influence the foreign officials, induce them to take or omit certain acts, and secure an improper advantage in obtaining and retaining business with Telecom Company 1 valued at approximately € 20,300,000.
In order to conceal the true nature of the approximately $2.1 million in bribe payments, Bereket and his co-conspirators disguised the bribes as payments to Consulting Company 1 for services performed pursuant to a consultancy agreement. In furtherance of the scheme, Bereket and his co-conspirators caused Ericcson’s branch office in Ethiopia to enter into a sham contract with Consulting Company 1 [described as a consulting company in Djibouti registered to the spouse of Foreign Official 2 and in which Foreign Official 2 acted as a representative], completed a draft due diligence report that failed to disclose the relationship between Foreign Official 2 and the registered owner of Consulting Company 1, and caused Ericsson to approve fake invoices from Consulting Company 1.”
As to “overt acts,” the indictment alleges among other things that Bereket and his co-conspirators caused Ericsson, on three separate occasions, to wire money from a bank account in Dubai to a bank account in New York “from which the funds were then wired to Consulting Company 1’s bank account in Djibouti.”
In the DOJ release, DOJ Assistant Attorney General Kenneth Polite Jr. stated:
“Bereket allegedly used the U.S. financial system to pay bribes to high-level government officials in Djibouti to ensure that Swedish telecom giant Ericsson won a multimillion-dollar government contract. [The] unsealed charges demonstrate the department’s commitment to hold individuals accountable for violations of the FCPA and to ensure that business is won or lost on merit, not the amount of bribes a company’s employees and agents are willing to pay.”
U.S. Attorney Audrey Strauss (S.D.N.Y.) stated:
“As alleged, Afework Bereket conspired in a corrupt scheme to pay millions of dollars in bribes to two Djibouti government officials and an official of a state-owned telecom company to win a contract for Ericsson valued at more than €20 million. To disguise the scheme, Bereket allegedly engaged in financial sleight-of-hand involving a sham consulting contract, a false due-diligence report, and fake invoices. The alleged criminal scheme has been exposed, and Affe Bereket is now charged in our district with serious federal crimes.”
Charge Darrell Waldon (Acting Special Agent of the IRS-Criminal Investigation’s Washington, D.C. Field Office) stated:
“Our global economy should be one free from corrupt practices. The indictment unsealed today reflects the veracity in which IRS-CI will investigate those who engage in bribery to receive their business. Together with our partners at the Department of Justice, we will continue our efforts to ensure fair competition for companies around the world.”
According to the DOJ release, Bereket “remains at large.”
Elevate Your FCPA Research
There are several subject matter tags in this post. However, only subscribers to FCPA Professor's premium search feature can see and use them in research. Efficient and cost-effective FCPA research is just a click away.