Ericsson Pleads Guilty Over Bribery Charges, Axes 8,500 Jobs
Thousands of staff impacted by headcount reduction, as giant telecoms giant pleads guilty to US bribery charges
Swedish telecoms giant confirmed two bad news exercises in recent weeks, that included a guilty legal plea and the axing of thousands of jobs.
CNN reported that Ericsson will cut 8,500 jobs around the world in a bid to slash costs, with 1,400 jobs set to go in its home country of Sweden.
The firm has also confirmed that it will settle US bribery charges and will once again pay a hefty financial penalty.
Jobs losses
The job losses at Ericsson are part of its efforts to cut costs by 9 billion crowns ($859 million) by the end of this year.
Among other measures, the plan will “also result in a need to address headcount,” an Ericsson spokesperson told CNN.
“We believe a total of 8,500 positions will be affected,” the spokesperson said, noting that the bulk of the layoffs would be made in the first half of this year. “The way headcount reductions will be managed will differ depending on local country practice.”
Ericsson also told CNN it would cut about 1,400 jobs in Sweden. Those cuts are part of the 8,500 total, the spokesperson said.
The job losses come after Ericsson in February reported lower than expected fourth-quarter core earnings, as slowing sales of 5G equipment in key markets including the United States impacted its bottom line.
Billion dollar fine
Meanwhile the Swedish telecoms giant has once again agreed to pay a huge financial penalty after another set of US bribery charges.
The first time this occurred was in December 2019 when the US DoJ alleged that Ericsson had agreed to pay more than $1 billion (£760m) to settle a probe into alleged corruption including bribing public officials in a number of countries.
At the time, the company “admitted to a years-long campaign of corruption in five countries to solidify its grip on telecommunications business“, the agency said.
The DoJ said at the time that Ericsson’s corrupt activities had extended from at least 2000 to 2016 in countries including Djibouti, China, Vietnam, Indonesia and Kuwait.
The settlement, believed to be one of the highest ever under the US’ Foreign Corrupt Practices Act (FCPA), included a $520m criminal penalty to the justice department and a payment of $540m to the Securities and Exchange Commission (SEC).
As a result of the 2019 settlement, the company entered into a deferred prosecution agreement (DPA) with the US Attorney’s Office for the Southern District of New York.
Fresh penalty
Then in February 2022, Ericsson’s own investigation in 2019 found payments had been made to the Islamic State militant group in Iraq.
The US Securities and Exchange Commission (SEC) in June 2022 opened up an investigation of Ericsson’s conduct in Iraq in 2019.
The firm at the time said it was “fully co-operating with the SEC,” over the matter.
Now nearly nine months later, Ericsson has announced that it has reached a resolution with the US Department of Justice (DOJ) regarding non-criminal breaches of its 2019 Deferred Prosecution Agreement (DPA).
Ericsson agreed to pay a $206 million penalty and pleaded guilty to violating the anti-bribery provisions of the Foreign Corrupt Practices Act, US prosecutors confirmed last week.
