Swedish telecommunications giant Ericsson in a recent regulatory filing disclosed in more detail what improvements it has made to its ethics and compliance program following its $1 billion settlement with U.S. authorities last year concerning violations of the Foreign Corrupt Practices Act.
On Dec. 7, 2019, Ericsson announced the resolution of previously disclosed investigations by the U.S. Department of Justice and the Securities and Exchange Commission regarding the FCPA violations. “While the company had a compliance program and a supporting control framework, they were not adequately implemented,” Ericsson stated in a Jan. 24 Form 6-K.
“Specifically, certain employees in some markets, some of whom were executives in those markets, acted in bad faith and knowingly failed to implement sufficient controls,” Ericsson said in the regulatory filing. “They were able to enter into transactions for illegitimate purposes and, together with people under their influence, used sophisticated schemes in order to hide their wrongdoing.”
Commenting on the resolution of the investigations, Ericsson CEO Börje Ekholm said, “The events described in the resolution are totally unacceptable. However, the resolution represents an important step for Ericsson. We are now fully focused on strengthening the company and making sure we are equipped to deal with compliance challenges.”
Among the improvements Ericsson has made, as described in the Form 6-K, include:
- Additional resources for its compliance and investigations functions;
- Reorganizing the allegation management process to ensure a centralized, professional intake of allegations, conduct of investigations, and remediation;
- Refining the risk assessment process to consist of a tiered approach and systematic risk mitigation methodology;
- Enhancing the due diligence process of third parties, including the overall monitoring of third-party engagements;
- Introducing more sophisticated analytic tools to better identify and prevent high-risk transactions and engagements;
- Enhancing the ethics and compliance vetting process for senior leaders;
- Refreshing compliance training modules for employees, including workshops and face-to-face training for employees in exposed roles; and
- Enhancing the internal anti-corruption and compliance-related awareness campaigns, including the company’s zero tolerance for corruption.
“We have already put in place many important changes to our ethics and compliance program, including adding further compliance and assurance competence, as well as strengthening our third-party management, leadership vetting, and internal controls,” Ekholm said. “This work will not stop. Our zero-tolerance policy requires constant oversight and renewal, and we are confident that we are on the right path.”
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