Ericsson, Inc. and Ericsson AB OFAC Settlement: $145.9K

The apparent violation arose from Ericsson's efforts to upgrade telecommunications network coverage in Sudan. On or around September 22, 2011, EAB signed a letter of intent with the Sudanese subsidiary of a third-country telecommunications company to provide equipment and services for the project, beginning with a test network connected via satellite. Ericsson hired BCom Offshore SAL ("BCom") to assist with installing, configuring, and servicing the satellite equipment destined for Sudan.

In late 2011, high temperatures in Sudan caused some of Ericsson's equipment to malfunction. EAB Employee #1, a radio systems expert and project manager, and EAB Employee #2, a senior engagement director within EAB's business unit responsible for managing the implementation of the Sudanese project, contacted an EUS subject matter specialist and director of business development with EUS's Hosted Satellite Group ("EUS Employee") for assistance. On January 2, 2012, the EUS Employee warned by email: "Please do not address any emails relating to this country [Sudan] to me. It is a serious matter and Ericsson can get fined and I can get fired."

Notwithstanding this warning, EAB personnel continued to discuss repairs with the EUS Employee while no longer referencing Sudan by name. On January 27, 2012, EAB Employee #1 sent an email referencing Sudan by name; the EAB Manager responded in Swedish "do not use that word ;)." On February 22, 2012, the EUS Employee sent an email with "East Africa" in the subject line advising EAB Employee #1 and EAB Employee #2 on how to move forward with the Sudan project given the heat constraints. On or about February 28, 2012, the EUS Employee met with EAB Employee #2 and BCom's COO in Barcelona at a sales conference to discuss the overheating problem. The group decided to solve the issue by purchasing an export-controlled U.S.-origin satellite hub capable of withstanding the heat.

On March 22, 2012, EAB purchased the satellite hub from a U.S.-based company for delivery to BCom's office in Geneva, Switzerland. On or about March 28, 2012, EAB Employee #1 exchanged emails with Ericsson's compliance department, which informed him that the supply of such a satellite hub to Sudan would violate Ericsson's internal sanctions compliance policy. Despite this, the EUS Employee, EAB Employee #1, and BCom's COO agreed to provide "Botswana" as the customer's location if future questions arose. On or about April 2, 2012, EAB Employee #1 structured Ericsson's purchase of the satellite hub into a multistage transaction between EAB and BCom, transshipping the hub through Switzerland and Lebanon and ultimately to Sudan. Every stage of the transaction except the last was invoiced; BCom did not issue an invoice to EAB for the final stage taking the satellite hub from Lebanon to Sudan. Ericsson has since terminated its relationship with BCom.

OFAC determined that Ericsson voluntarily self-disclosed the apparent violation and that the apparent violation constitutes an egregious case. The statutory maximum civil monetary penalty amount for the apparent violation was $360,230, and the base civil monetary penalty amount was $180,115. The settlement amount of $145,893 reflects OFAC's consideration of the facts and circumstances pursuant to the General Factors under OFAC's Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A.

This enforcement action highlights the importance of empowering compliance personnel to prevent transactions prohibited by U.S. economic and trade sanctions. Entities should ensure their sanctions compliance teams are adequately staffed, receive sufficient technology and other resources, and are delegated appropriate authority to ensure compliance efforts meet an entity's risk profile. Sanctions compliance personnel should be equipped with the tools necessary to review, assess, and proactively address sanctions-related issues that arise with ongoing or prospective transactions, customers, or counter-parties.

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