September 19, 2017

Following two articles about Ericsson in Svenska Dagbladet, published online on Septmember 18 and in the paper on September 19, Ericsson makes the following statement:

We are disappointed by the articles about Ericsson that Svenska Dagbladet published on September 18 and which include a speculative description of the ongoing SEC investigation.  Since the SEC and DOJ initiated their questioning in March 2013, Ericsson has voluntarily cooperated and provided information to the authorities. We have confirmed that Ericsson employees at various levels and with different responsibilities have been assisting the US authorities, as is natural in these cases. Since 2013, approximately twenty-five Ericsson employees have been interviewed by or presented to the authorities, including a few members of the management team as well as employees from different functions and different regions who, in their respective roles, have knowledge of processes, policies and facts.

As we described in our response to Svenska Dagbladet (our full response is found further down), the appointment of the management team has been preceded by a solid vetting process and Börje Ekholm has full confidence in his team.

We also note that Svenska Dagbladet speculates about possible fines by the SEC. We will not comment on such speculations. However, as a listed company, we always follow the requirements to publicly disclose any information about events that would have a material impact on the company or its finances. Should such materiality arise, Ericsson will disclose information in accordance with regulatory requirements.

Response sent to Svenska Dagbladet on September 18:

Ericsson has been working with business ethics and compliance for a long period of time. We face the same challenges as other global companies in ensuring we conduct our business in an ethical and compliant way. We are not perfect and we can’t rule out that mistakes have been made in the past or might happen in the future. We are however, working very hard to constantly improve our compliance processes and programs, how we follow-up and how it is implemented in the organization. When we find wrongdoings, we take actions and learn from them to limit the risk that such conduct is repeated anywhere in our organization. For instance, in 2016, 86 employees had to leave Ericsson, due to violations of the company’s Code of Business Ethics.

Our compliance program

In 2011, Ericsson formalized its compliance program, under the management of a Chief Compliance Officer, who reports to the Chief Legal Officer, and has since then strengthened the program incrementally. This applies to both the structure and the execution of the program, as well as follow-up and how it is implemented in the organization. Some of the highlights of this process:

2004: Code of Business Ethics adopted, summarizing the company’s Code of Conduct and other important Group directives and policies.

2007: Whistleblower process established.

2007: First compulsory staff training platform “E-learning Anti-Corruption 1.0” launched and completed by more than 70,000 employees.

2008: Start of phase out of Sales Agent System.

2010: Start of GRI voluntary reporting on incidents.

2011: Chief Compliance Officer appointed to head up Ericsson’s anti-corruption program.

2011: New restricted agent policy adopted.

2012: Formal anti-corruption program adopted – evaluated by the Audit Committee of the Board at least annually.

2013: Updated agent policy further restricting substantially the possibility to retain and use agents.

2013: New Anti-Corruption Directive adopted.

2013: New e-learning anti-corruption training launched, completed by more than 90,000 employees.

2013: Group Compliance Forum and Regional Compliance Fora established for the handling of reported violations of the Code of Business Ethics.

2015: Ericsson Compliance Line (an externally administrated whistleblower tool) implemented.

2016: Ethics and Compliance Board established, comprised of members of the Executive Team and chaired by the CEO, to ensure overall governance of compliance within the Group.

2016: Automated anti-corruption screening tool for supplier and other business partners implemented and third party due diligence process improved.

2017: Assessment of the Group’s anti-corruption program by external counsel appointed by the Board, with suggestions how to improve the program further.

2017: Regional Compliance Offices and Business Partner Review Boards established in every region.

2017: Ethics and Compliance vetting process now reviews ethics and compliance-related behaviour of senior leaders.

All Ericsson employees must acknowledge that they have read and understood the Code of Business Ethics at the time of employment and in global acknowledgement processes approximately every second year. The first acknowledgment process took place in 2004. In 2015, 99% of the employees acknowledged the CoBE and the 2017 process is currently ongoing.

Inquiries from SEC and DoJ

Since March 2013, Ericsson has been answering questions from the United States Securities and Exchange Commission and the United States Department of Justice regarding our compliance with the U.S. Foreign Corrupt Practices Act in multiple regions. This is a voluntary cooperation by Ericsson. As we have stated before, it would be inappropriate to give further comments about the ongoing investigation.

However, we can confirm that as a natural part of the investigation, Ericsson employees in different positions and with different areas of responsibilities have been interviewed to assist the investigation. During the four years since the investigation was initiated, approximately 25 Ericsson employees have been interviewed by or have presented to the authorities. This has included also a few members of the Executive Team as well as staff from different functions and different regions who in their different capacities have knowledge of processes, policies and facts.

We have been voluntarily cooperating with the US authorities throughout the process and will continue to do so.

Vetting of senior leaders

In 2017, Börje Ekholm underlined the importance of compliance and business ethics when introducing a vetting process for appointing his new Executive Team. All members of the current Executive Team have been vetted and President and CEO Börje Ekholm has full confidence in his Executive Team.

In addition, the vetting process covers some 100 employees in exposed positions. This includes key employees within sourcing, customer facing roles, finance etc. All future recruitments to these positions will go through mandatory vetting. In designing the process Ericsson has drawn on external counsel to ensure a best-in-class and robust process.

The comprehensive vetting process is designed to address ethics and compliance concerns involving for example: deviations from company policies, directives, and instructions on key areas such as gifts, entertainment, dealings with third parties, travel, manual payments, use of cash, dealings with agents and consultants, use of company resources and expense reports, other forms of potential improper conduct or deviations from the Code of Business Ethics (e.g., sexual harassment, conflicts of interest, deviations from laws and regulations).

After completed vetting a compounded view of the candidates/employees will make the basis for any recruitment or promotion decisions. The outcome of the vetting is part of the decisions together with traditional performance potential and leadership reviews.