Ericsson pled guilty to and will pay more than $206 million in fines to settle on a long-standing investigation by the U.S. Department of Justice (DoJ) tied to bribery allegations across its operations in a number of countries that may have involved payment to a terrorist organization in Iraq.

Ericsson pled guilty to DoJ charges that the vendor failed to provide information related to a previous settlement with the DoJ and Securities and Exchange Commission (SEC). That investigation was launched in June 2022, and involves Ericsson’s handling and reporting of the DoJ investigation into bribery and corruption allegations against the vendor for its work in Iraq.

Ericsson had admitted to multiple incidents of bribery and corruption by its operations in Iraq between 2011 and 2018. Most damning of all, the company said it can’t unequivocally deny that bribes paid by some employees during that period ended up in the hands of the Islamic State.

“With respect to the historical conduct in Iraq, the company continues to thoroughly investigate the facts in full cooperation with the DOJ and the U.S. Securities and Exchange Commission,” Ericsson noted in a statement on the latest settlement. “As previously disclosed, the company’s 2019 investigation did not conclude that Ericsson made or was responsible for any payments to any terrorist organization; and the company’s significant further investigation over the course of 2022 has not altered this conclusion.”

Ericsson initially entered into a deferred prosecution agreement (DPA) in 2019 tied to extensive bribery claims. Ericsson claimed the criminal activity spanned six countries and ended in the first quarter of 2017, with the vendor eventually firing 50 people in 2018 following an internal investigation.

Current Verizon CEO Hans Vestberg led Ericsson between 2010 and mid-2016 – or six months prior to when these activities were alleged to have stopped – when he abruptly resigned following several underperforming quarters. Vestberg was at Ericsson for 19 years, and replaced Carl-Henric Svanberg, who left Ericsson to become chairman at BP.

Ericsson eventually paid more than $1 billion in fines tied to that initial investigation.

“When the department afforded Ericsson the opportunity to enter into a DPA to resolve an investigation into serious [Foreign Corrupt Practices Act] violations, the company agreed to comply with all provisions of that agreement,” Assistant Attorney General Kenneth Polite, Jr., of the Justice Department’s Criminal Division, noted in a statement on the most recent settlement. “Instead of honoring that commitment, Ericsson repeatedly failed to fully cooperate and failed to disclose evidence and allegations of misconduct in breach of the agreement. As a result of these broken promises, Ericsson must plead guilty to two criminal offenses and pay an additional fine.”

Ericsson earlier this week stated Chief Compliance Officer Laurie Waddy would be leaving the company after a four-year stint. Waddy had previously served in similar roles at organizations across Europe.

“Over the past four years Ericsson has made tremendous progress building toward a best-in-class compliance program,” Waddy noted in a statement. “The company is well positioned to continue this journey, and I am excited to explore new opportunities.”

Waddy will be replaced temporarily by current Ericsson compliance executive Jan Sprafke.

The settlement news comes on the heels of Ericsson struggling to find operational stability despite being one of the world’s largest 5G telecommunications equipment vendors and operating in a geopolitical-enhanced environment.

The vendor slashed 10% of its workforce in its home country of Sweden late last month, which was followed by announcing another 8,500 job cuts across its global operation. The vendor counted approximately 105,000 employees worldwide before the latest cuts.

Ericsson reported disappointing fourth quarter and full-year 2022 results hampered by slowing 5G spend that the vendor expects will continue to lag heading into the new year and create operating uncertainty.

Ericsson President and CEO Börje Ekholm explained to investors that operational headwinds increased in Q4, with “operators slowing the pace on network investments, and that includes front-runner customers in many markets.”

Ekholm said those issues impacted 5G sales in North America, which he expects to continue into 2023. That issue will see operators “continue to sweat the assets in response to the macroeconomic headwinds,” which he added will coincide with operators adjusting their inventory levels as supply chain challenges ease.

“We remain positive on the long-term outlook for our business,” the vendor noted in its earnings release. “However, the near-term outlook … remains uncertain.”

Countering the broader macroeconomic headwinds is a positive geopolitical environment that has many Western governments suppressing the ability of China-based vendors like Huawei and ZTE to sell equipment into those countries.

Nokia CEO Pekka Lundmark earlier this week expressed confidence in the vendor gaining market share as “geopolitical tailwinds continue to favor us.”