US to fine Ericsson for shipping to Cuba

US to fine Ericsson for shipping to Cuba
Reuters | May 25, 2012, 12.16PM IST

CUBA: World number one mobile network equipment maker Ericsson's
subsidiary in Panama will pay a $1.75 million penalty to the US
Department of Commerce for violating US export restrictions on Cuba, a
settlement agreement obtained by Reuters showed.

The agreement, which was approved but has not yet been made publicly
available, showed that the firm's Panama branch operated a "scheme"
under which it sent broken equipment from Cuba to the US for repair
after masking its origin.

After uncovering the shipments, Ericsson de Panama voluntarily disclosed
the violations to the export control arm of the Commerce Department, the
settlement showed.

Ericsson de Panama "knew that exports from the United States to Cuba
were unlawful because it had been informed by its parent company of the
embargo placed on Cuba by the United States," the agreement said. The
settlement was signed last week and given final approval by a Commerce
Department official on Thursday.

The export scheme was developed by three former Ericsson de Panama
employees, spokesman Frederik Hallstan said, speaking from Ericsson's
corporate headquarters in Sweden.

"This was not standard Ericsson procedure," Hallstan said. "We have
changed our processes."

The three employees were dismissed after the scheme was uncovered by the
company, he said.

The penalty covered 262 violations of federal regulations committed
between 2004 and 2007, concerning about $320,000 worth of equipment, the
settlement agreement said.

Under the scheme, the Panama branch received broken items from customers
in Cuba, removed any recognizable markings and falsified papers before
sending the items to a repair center in the United States. After
repairs, they were shipped back to Cuba via Panama, the agreement said.

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