SEC probing Ericsson over Iraq corruption scandal

Ericsson disclosed the investigation in a regulatory filing Thursday.

The SEC “has notified the company that it has opened an investigation concerning the matters described in the company’s 2019 Iraq investigation report,” Ericsson said. “It is too early to determine or predict the outcome of the investigation, but Ericsson is fully cooperating with the SEC.”

Though unspecified, the probe is likely focused on potential violations of the Foreign Corrupt Practices Act (FCPA).

Ericsson launched an internal investigation in March after the company announced a month prior the discovery of the alleged misconduct in Iraq between 2011 and 2019. The disclosure came ahead of media reports suggesting the company engaged in a “pattern of bribery and corruption” with terrorist group ISIS.

According to Ericsson, it first recognized the potential for compliance failures in Iraq when “unusual expense claims” dating back to 2018 triggered a review about potential breaches of its code of business ethics. An initial investigation launched in 2019 determined the code was violated.

Ericsson entered into a deferred prosecution agreement (DPA) with U.S. authorities in December 2019 as part of a $1 billion FCPA settlement that included the naming of an independent compliance monitor for three years. The settlement resolved charges Ericsson paid bribes in a handful of countries over 17 years: Djibouti, China, Vietnam, Indonesia, and Kuwait. A parallel settlement with the SEC added Saudi Arabia to the list.

The company is engaged with the Department of Justice (DOJ) after the agency notified it of a second violation of the 2019 DPA regarding the Iraq disclosure. New Ericsson Chief Legal Officer Scott Dresser said in March it was “too premature to predict any outcomes” regarding potential consequences to come from the DOJ.