Ericsson Makes USD 1.2 Billion Provision To Settle US Corruption Probe (Photo Credit: Twitter)
Swedish telecoms equipment maker Ericsson said Thursday it had made a USD 1.2 billion provision to cover the costs of resolving a US corruption investigation. The charge, which will impact the company's third quarter earnings, covers the penalty Ericsson expects to receive, it said.
Ericsson has been cooperating since 2013 with an investigation by the United States Securities and Exchange Commission (SEC) and, since 2015, with an investigation by the US Department of Justice. The investigation covers a period up to the first quarter of 2017, and involves operations in six countries: China, Djibouti, Indonesia, Kuwait, Saudi Arabia and Vietnam.
"With today's announcement we confront another legacy issue and take the next step in resolving it. We have to recognise that the company has failed in the past," Ericsson chief executive Borje Ekholm said in a statement.
The company acknowledged there had been several breaches of its code of business ethics.
It said they included "a failure to react to red flags and inadequate internal controls which enabled a limited number of employees to actively circumvent internal controls for illegitimate purposes." Ericsson is scheduled to present its third quarter earnings report on October 17.