REG - Telefon AB Ericsson - U.S. DOJ Resolves 2019 DPA Breaches with Ericsson

Telefonaktiebolaget LM EricssonAnnouncement

03/03/2023 07:45

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RNS Number : 8360R  Telefonaktiebolaget Lm Ericsson  03 March 2023

U.S. Department of Justice Resolves 2019 Deferred Prosecution Agreement
Breaches with Ericsson

Ericsson (NASDAQ: ERIC) today announced that it has reached a resolution with
the U.S. Department of Justice (DOJ) regarding non-criminal breaches of its
2019 Deferred Prosecution Agreement (DPA). Under the agreement, and as
provided for by the DPA, LM Ericsson will enter a guilty plea regarding
previously deferred charges relating to conduct prior to 2017. In addition,
Ericsson will pay a fine of $206,728,848. The entry of the plea agreement will
bring the 2019 DPA to an end.

In 2019, Ericsson entered into the DPA to resolve previously disclosed Foreign
Corrupt Practices Act (FCPA) violations relating to conduct in several
countries between 2010 and 2016. Since the start of the DPA, the DOJ has not
alleged or charged Ericsson with any new criminal misconduct, and no new
illegal conduct has been alleged or charged today. As previously announced in
October 2021 and March 2022, however, the DOJ notified Ericsson that it had
failed to provide documents and information to the DOJ in a timely manner and
had not adequately reported to the DOJ information relating to a 2019
Iraq-related internal investigation.

Under the DPA, the DOJ has the sole discretion to determine that the Company
has breached its obligations, and if it makes this determination, it has the
ability to prosecute the Company for the past misconduct covered under the
DPA. As a result, the Company has entered a guilty plea for the FCPA
violations to which it previously admitted as part of the DPA.  The Company
is not adjusting the long-term financial targets it has given, as it does not
expect any material deviations from these.

Börje Ekholm, CEO of Ericsson, commented, "Taking this step today means that
the matter of the breaches is now resolved.  This allows us to focus on
executing our strategy while driving continued cultural change across the
company with integrity at the center of everything we do. This resolution is a
stark reminder of the historical misconduct that led to the DPA.  We have
learned from that and we are on an important journey to transform our culture.
To be a true industry leader, we must be a market and technology leader while
also being a leader in how we conduct our business. The Ericsson Executive
Team and I remain committed to this transformation and we continue to
implement stringent controls and improved governance, ethics and compliance
across our company, with corresponding enhancements to our risk management
approach. The change continues and we are a very different company today and
have made important changes since 2017 and over 2022."

Ronnie Leten, Chairman of the Board of Directors, further commented, "Since
2017, under the strong leadership of Börje Ekholm, the Company has
substantially improved its approach to risk management and compliance,
including an overhaul of its Anti-Corruption Program to prevent and detect
problematic conduct. The Board continues its active oversight, and with our
full support, Börje and his leadership team will continue to embed these
changes into the governance and culture of the Company."

With respect to the historical conduct in Iraq, the Company continues to
thoroughly investigate the facts in full cooperation with the DOJ and the U.S.
Securities and Exchange Commission. As previously disclosed, the Company's
2019 investigation did not conclude that Ericsson made or was responsible for
any payments to any terrorist organization; and the Company's significant
further investigation over the course of 2022 has not altered this conclusion.

Commenting on the Company in the agreement, the DOJ noted: " Ericsson  has
significantly enhanced its compliance program and internal accounting controls
through structural and leadership changes, including but not limited to the
hiring of a new Chief Legal Officer and new Head of Corporate and Government
Investigations and the establishment of a multi-disciplinary Business Risk
Committee comprised of Group-level senior executives … and has committed to
continuing to implement and test further enhancements."  Further, " Ericsson 
has significantly enhanced its cooperation and information sharing efforts."

 

A Q&A document with further details is available at:
https://www.ericsson.com/en/newsroom (https://www.ericsson.com/en/newsroom)

 

FOR FURTHER INFORMATION, PLEASE CONTACT

Contact person

Peter Nyquist, Head of Investor Relations

Phone: +46 705 75 29 06

E-mail: peter.nyquist@ericsson.com (mailto:peter.nyquist@ericsson.com)

 

Additional contacts

Stella Medlicott, Senior Vice President, Marketing and Corporate Relations

Phone: +46 730 95 65 39

E-mail: media.relations@ericsson.com (mailto:media.relations@ericsson.com)

Investors

Lena Häggblom, Director, Investor Relations

Phone: +46 72 593 27 78

E-mail:  lena.haggblom@ericsson.com (mailto:lena.haggblom@ericsson.com)

Alan Ganson, Director, Investor Relations

Phone: +46 70 267 27 30

E-mail: alan.ganson@ericsson.com (mailto:alan.ganson@ericsson.com)

Media

Peter Borsos, VP, Head of External Relations

Phone: +46 703 17 68 00

E-mail: peter.borsos@ericsson.com (mailto:peter.borsos@ericsson.com)

Kristoffer Edshage, Head of Regulatory and Financial Communication

Phone: +46 722 20 44 46

E-mail: media.relations@ericsson.com (mailto:media.relations@ericsson.com)

Corporate Communications

Phone: +46 10 719 69 92

E-mail: media.relations@ericsson.com (mailto:media.relations@ericsson.com)

 

Forward-looking statements

This release includes forward-looking statements, including statements
reflecting management's current views relating to the growth of the market,
future market conditions, future events, financial condition, and expected
operational and financial performance, including, in particular the following
risks and uncertainties:

- Potential material additional costs and liability resulting from our ongoing
future compliance with the terms of the plea agreement with the DOJ and
extended monitorship

- Potential to become a target for public scrutiny as a result of entering
into the plea agreement with the DOJ, including incorrect misinterpretations
of the resolution, complaints to regulatory agencies, negative media
publicity, interference from our competitors, all of which could damage our
reputation and materially and adversely affect our business and prospects

- Risks resulting from entering into the plea agreement including potential
debarment, reputational risk, as well as potential negative impact on
commercial contracts, dealings with financial institutions, contracts with
suppliers, primarily due to counter-party reluctance to continue business
relationships

- Potential material additional liability resulting from past conduct,
including allegations of past conduct in Iraq or other locations that remains
unresolved or unknown

- Risks related to internal control and governance, including the potential to
incur material liability in connection with internal controls surrounding
payments made to third parties in connection with historical conduct in Iraq
or other locations

- Our goals, strategies, planning assumptions and operational or financial
performance expectations

- Ongoing geopolitical and trade uncertainty, including challenging global
economic conditions, market trends and pandemics such as COVID-19

- Industry trends, future characteristics and development of the markets in
which we operate

- Our ability to comply with legal and regulatory requirements internationally

- Our future liquidity, capital resources, capital expenditures, cost savings
and profitability

- The expected demand for our existing and new products and services as well
as plans to launch new products and services including research and
development expenditures

- The ability to deliver on future plans and to realize potential for future
growth

- The expected operational or financial performance of strategic cooperation
activities and joint ventures

- The time until acquired entities and businesses will be integrated and
accretive to income

- Technology and industry trends including the regulatory and standardization
environment in which we operate, competition and our customer structure.

The words "believe," "expect," "foresee," "anticipate," "assume," "intend,"
"likely," "projects," "may," "could," "plan," "estimate," "forecast," "will,"
"should," "would," "predict," "aim," "ambition," "seek," "potential,"
"target," "might," "continue," or, in each case, their negative or variations,
and similar words or expressions are used to identify forward-looking
statements. Any statement that refers to expectations, projections or other
characterizations of future events or circumstances, including any underlying
assumptions, are forward-looking statements.

We caution investors that these statements are subject to risks and
uncertainties many of which are difficult to predict and generally beyond our
control that could cause actual results to differ materially from those
expressed in, or implied or projected by, the forward-looking information and
statements.

Important factors that could affect whether and to what extent any of our
forward-looking statements materialize include, but are not limited to, the
factors described in the section "Risk Factors" in the latest interim report,
and in "Risk Factors" in the Annual Report 2021.

These forward-looking statements also represent our estimates and assumptions
only as of the date that they were made. We expressly disclaim a duty to
provide updates to these forward-looking statements, and the estimates and
assumptions associated with them, after the date of this release, to reflect
events or changes in circumstances or changes in expectations or the
occurrence of anticipated events, whether as a result of new information,
future events or otherwise, except as required by applicable law or stock
exchange regulations.

This information is information that Telefonaktiebolaget LM Ericsson is
obliged to make public pursuant to the EU Market Abuse Regulation. The
information was submitted for publication, through the agency of the contact
person set out above at 23:35 CET on March 2, 2023.

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