The Swedish telecommunications giant Ericsson announced Thursday evening that the American authority to regulate the financial markets has opened an investigation related to suspicions of corruption in Iraq that may lead to the imposition of new fines on the company from the American judiciary.
The company said in Statement “The US Securities and Exchange Commission notified Ericsson to open an investigation into the facts contained in the company’s report on Iraq in 2019”.
It added that “it is too early to determine or speculate on the outcome of this investigation, but Ericsson is cooperating fully with the SEC.”
Ericsson did not give any details of the contents of the investigation, but a large number of shareholders in the Swedish group criticized the lack of transparency in the markets.
At the beginning of this year, the disclosure of this corruption case in Iraq led to a sharp drop of regarding 30% in the price of the shares of the leading group in the stock market, without achieving any recovery since then.
In mid-April, Ericsson spoke of “potential” new fines the US Department of Justice, whose universal jurisdiction allows it to pursue foreign groups, might impose.
The case came to light in February prior to the publication of a major investigative report coordinated by the International Consortium of Investigative Journalists. This forced Ericsson to announce the results of an internal investigation dating back to 2019, to determine the facts of possible corruption in the group’s activities in Iraq during the previous eight years.
The internal investigation, in particular, talks regarding suspicious payments for land transportation in areas controlled by the Islamic State, which are believed to have ended up in the organization’s pockets.
At the end of April, Swedish courts also announced the opening of an investigation into possible acts of corruption, in particular the possible payment of bribes to members of the Islamic State in Iraq.
This issue worries investors because Ericsson has a history in this area.
In December 2019, the group paid $1 billion to the US judicial system to close corruption charges in five other countries (Djibouti, China, Vietnam, Indonesia, and Kuwait), as part of a contractual agreement or “deferred successor agreement”.