Swedish equipment maker to book SEK12 billion provision in Q3 to pay SEC, DoJ fines and other costs.

Ericsson estimates the cost of resolving an ongoing US corruption investigation to come in at around 12 billion kronor (€1.1 billion/US$1.2 billion) and has made a provision in that amount that will hit its third quarter results.

The Swedish vendor has been under investigation in the US since 2013, when the SEC opened a probe, followed by the Justice Department (DoJ) two years later.

The two authorities are examining its compliance with the US Foreign Corrupt Practices Act (FCPA). Investigations have revealed that it it failed to comply with the FCPA, and breached its own business ethics, in six countries – China, Djibouti, Indonesia, Kuwait, Saudi Arabia and Vietnam – over a period that runs to the end of the first quarter of 2017.

Ericsson has provided few details of the investigation, other than to say that it relates to breaches by a limited number of employees and that it has taken disciplinary measures, including firing some staff.

The investigation is still going on and Ericsson did not comment on when it might draw to a close, but said it now has enough visibility to be able to predict the financial impact on its business.

It expects monetary sanctions from the SEC and DoJ to come in at around $1 billion, with the remainder of its provision being used to pay off other costs associated with the investigation.

"We have to recognize that the company has failed in the past and I can assure you that we work hard every day to build a stronger Ericsson, where ethics and compliance are cornerstones in how we conduct business," said Ericsson CEO Börje Ekholm, who has led the Swedish vendor since early 2017.

"Over the past two years, we have made significant investments in our ethics and compliance programme including our investigative capabilities and have taken actions against employees who have transgressed our values and standards," Ekholm said.