SEC Investigates Ericsson Bribe Allegations

The United States Securities and Exchange Commission (SEC) has opened an investigation into Swedish multinational Ericsson’s business practices in Romania. The investigation is related to allegations made by a former Ericsson employee that the company used an approved slush-fund to pay off Romanian officials and decision makers to win contracts. OCCRP published an in-depth story revealing the controversy in March 2013.

The allegations of bribery on a corporate scale come amid a battle between Ericsson and its former general manager in Romania, Thomas Lundin, over $7 million dollars. Ericsson maintained that Lundin stole the money from the company, while Lundin claimed that the money was part of a larger system, set up by the company, to bribe key officials and win contracts in Romania. Lundin claimed that the bribes were the only reason Ericsson’s business in Romania grew so quickly from near nothing to over $1 billion.

A spokesperson for Ericsson, Fredrik Hallston, told OCCRP that Ericsson received a request from the SEC in March 2013 to provide information related to company policies “regarding anti-corruption and related issues.” He added that “Ericsson fully cooperates with SEC and will thus provide the SEC with the information requested.”

The investigation comes less than two months after OCCRP released a story detailing Ericsson’s Worldwide Commission Scheme (WCS), a network of offshore companies operating out of Cyprus, Liechtenstein, and Switzerland. Lundin claimed that the WCS was a company sanctioned network used to bribe at least two former Romanian telecommunications ministers. The former manager’s lawyers argued that Ericsson’s board was aware that the funds were being used to bribe politicians. Ericsson claims that the WCS was meant to pay “agents” given the task of obtaining new contracts on behalf of the company, and not for bribes.