At a time when 5g is booming, Huawei and Nokia are actively laying out 5g territory, while Ericsson, a Swedish telecom equipment giant, has a bribery scandal.
On December 6, 2019 local time, the U.S. Department of justice and the U.S. Securities and Exchange Commission jointly announced that Ericsson, a Swedish communication equipment giant, agreed to pay about $1.06 billion (about RMB 7.46 billion) to reach a settlement with the U.S. government to quell years of overseas corruption investigations against Ericsson.
Five countries paid bribes and fined up to US $1.06 billion
Ericsson bribed in five countries, including Vietnam and Indonesia, between 2000 and 2016, according to documents released by the Justice Department, saying it was suspected of violating the U.S. Anti-overseas Corruption Law (FCPA). Jeff Berman, the prosecutor for the Southern District of New York, also said:
The bribery was also confirmed by Ericsson's Egyptian subsidiary. The company acknowledges that the purpose of bribery is to consolidate its telecommunications business, involving five countries around the world and involving several senior managers of the company.
In the end, Ericsson chose to accept the fine and reach a settlement with American prosecutors. Ericsson is expected to pay about $980 million in settlement money, plus $81.5 million in taxes and a total fine of $1.06 billion (about 7.4 billion yuan). According to the US, the fine has been reduced by 15% due to Ericsson's active cooperation in the investigation. But the $1.06 billion fine is still not a small amount. The penalty amount has reached one fifth of Ericsson's single quarter revenue.
Ericsson seems ready for the punishment. In September, when Ericsson announced its Q3 results, it said it would prepare SEK 12 billion (US $1.23 billion) to respond to the US bribery investigation. Now the Justice Department officially announced the punishment, and Ericsson, in addition to announcing the punishment, also said that it would complete the payment behavior within this month, which may affect Ericsson's fourth quarter financial performance, but Ericsson CFO Carl Meiland still said that it will not affect any financial objectives of the company.
Since last year, 5G construction has been in full swing, and major communications manufacturers have put it on the agenda, especially Huawei, Nokia and Ericsson.
As the largest supplier of mobile telecommunication equipment, Ericsson has made outstanding achievements in automation technology, digital service and IOT platform. In terms of 5g layout, Ericsson has signed more than 75 commercial 5g agreements or contracts with different telecom operators around the world, of which 23 large 5g networks have been officially put into commercial use.
However, the rise of Huawei surpassed Ericsson, which had to further invest in 5g R & D layout. When Huawei was recently sanctioned by the United States, there were many claims in the industry that Ericsson would seize the opportunity to suppress Huawei again. However, the bribery scandal caused a lot of trouble for itself, and it added a lot of difficulties to catch up with Huawei in 5g.