The agreement, which was approved on Thursday 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 U.S. 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.

(Reporting By Steve Stecklow and Basil Katz; Writing by Basil Katz; Editing by Daniel Magnowski)

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