OFAC reaches settlement with Ericsson for breach of Sudan sanctions

The US Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’) has reached a $145,893 settlement with Swedish telecoms operator Ericsson for an ‘apparent’ violation of the Sudanese Sanctions Regulations (31 CFR part 538 (‘SSR’)) and the International Emergency Economic Powers Act (‘IEEPA’).

In 2011, Ericsson agreed to supply equipment and services to the Sudanese subsidiary of a third-country telecommunications company. When the high temperatures in Sudan caused some of Ericsson’s equipment to malfunction, two former employees arranged to purchase a satellite hub from a US-based company, which was ultimately shipped to Sudan despite a warning from Ericsson’s compliance team that this would violate the company’s internal policy on sanctions compliance. The hub was shipped via a multi-stage transaction through Switzerland and Lebanon in 2012, with the employees and a contractor, BCom, agreeing to provide the location of the customer as ‘Botswana’ in the event of any questions.

Mitigating factors were that Ericsson voluntarily self-disclosed to OFAC, performed a ‘thorough internal investigation’ and had not received a penalty from OFAC in the five previous years.

The ‘aggravating’ factors that OFAC took into account were that the employees ‘wilfully’ violated the SSR with the purpose of evading sanctions; at least one of the employees was a manager; the warnings from the compliance department were ignored; the actions caused harm to the US’s sanctions objectives and that Ericsson is ‘a large and commercially sophisticated entity.’

The statutory maximum civil monetary penalty was $360,230, and the base civil monetary penalty amount was $180,115.

The settlement agreement can be found here:
https://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20180606_ericsson_settlement.pdf

More information on the action can be found here:
https://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20180606_ericsson.pdf