U.S. charges ex-Ericsson employee in bribery scheme

The U.S. charged a former Ericsson employee for his alleged role in a bribery scheme to pay government officials in Djibouti $2.1 million so that Ericsson could win and retain business of a state-owned telecom operator in the country.

A federal indictment (PDF) unsealed Wednesday in the Southern District of New York charged Afework Bereket, 53, with two counts, including conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and conspiracy to commit money laundering.

From 2010 to mid-2013 Bereket was the Ericsson Egypt account manager for the Horn of Africa region, which includes Djibouti. The alleged activities took place between 2010 and early 2014. Bereket, a dual citizen of Ethiopia and Sweden, is not in U.S. custody and faces up to 25 years in prison if convicted on both counts.

The indictment claims that Bereket as an Ericsson employee and others conspired together and paid bribes totaling $2.1 million to two high-ranking government officials and one high-level executive at the state-owned telecom company. The aim was to influence and get an advantage in winning and keeping business valued at around EUR 20.3 million.

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“Bereket allegedly used the U.S. financial system to pay bribes to high-level government officials in Djibouti to ensure that Swedish telecom giant Ericsson won a multimillion-dollar government contract,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division, in a statement. “Today’s unsealed charges demonstrate the department’s commitment to hold individuals accountable for violations of the FCPA and to ensure that business is won or lost on merit, not the amount of bribes a company’s employees and agents are willing to pay.”

Ericsson is a leading telecom equipment vendor and in the second quarter of 2021 dominated the No. 1 position for radio access network (RAN) suppliers outside of China, according to Dell’Oro Group.

According to the federal charges brought in June 2020 against Bereket, the alleged scheme involved hiding the bribes as payments from a sham consulting agreement with a company in Djibouti that was owned by the spouse of one of the foreign officials, who also acted as a representative of the consulting company. The indictment says this caused Ericsson’s Ethiopia branch office to enter into related fake contracts, complete falsified due diligence reports, and approve phony invoices from the consulting company that supposedly reflected “thousands of hours of work.”

The court document cites emails between Bereket and other alleged co-conspirators about the payments. Funds were wired from an Ericsson bank account in Dubai to other accounts, including in New York, eventually landing with the consulting company in Djibouti.

New York prosecutors said the scheme took place up until around 2014, when the Djibouti phone company sent Ericsson payment for its work related to the contract.

RELATED: Ericsson settles Nokia bribery-related damages claim for $97M

Ericsson, headquartered in Sweden, already agreed in 2019 to pay $1 billion in penalties after U.S. investigations into the company for corruption and bribes to win business. The payment included a more than $520 million penalty with the DoJ to avoid criminal prosecution. Ericsson Egypt had pled guilty to one criminal count related to bribery.

Investigations by the Securities and Exchange Commission (SEC) and DoJ spanned six countries, including Djibouti, involving tens of millions of dollars and activities over 17 years.   

Ericsson also agreed to three years of compliance monitoring by a third party that started in June 2020, after which DoJ bribery charges would be dismissed.

The vendor in May settled with Nokia, agreeing to pay its Finnish rival around $97 million for damages claims stemming from the corrupt practices investigations.