Posted Feb 16 2022 at 01:24 PMUpdated Feb 16. 2022 at 04:13 PM
The revelation is embarrassing. Ericsson may have funded the Islamic State terrorist group. It was the group itself that recognized this on Tuesday evening, revealing the conclusions of an internal investigation launched in 2019 following suspicious expenses had been identified in Iraq.
This work uncovered “payments made to intermediaries and the use of alternative transport routes to circumvent Iraqi customs, at a time when terrorist organizations, including the Islamic State in Iraq and the Levant, controlled certain transport routes,” explains Ericsson. However, investigators might not determine the end recipients of these payments and no Ericsson employee was identified as having directly participated in the financing of terrorist organizations.
More broadly, the situation described is catastrophic for the reputation of the Swedish group. By looking at the actions of its employees, customers and suppliers in Iraq between 2011 and 2019, multiple proofs of corruption have been accumulated. As well as violations of the rules of internal financial control, conflicts of interest, tax irregularities or even obstruction of the investigation.
Bad precedents
The markets immediately reacted to the announcements. This Wednesday morning, the stock market of the telecom giant plunged by 11%, erasing in a few hours more than 3 billion euros of capitalization. It must be said that the case brings back very bad memories. In 2019, Ericsson had to pay more than $ 1 billion in fines in the United States to settle corruption investigations.
The charges once morest the Swede, including paying bribes to land contracts between 2010 and 2016, spanned six countries – China, Vietnam, Djibouti, Indonesia, Saudi Arabia and Kuwait. Iraq was not on the list. But Ericsson revealed in October 2021 that the US Justice Department had warned him of a breach of his obligations under their stay of prosecution agreement for failing to release certain documents and information.
“A sad chapter in our proud history”
The case is a blow for Börje Ekholm, Ericsson’s boss since 2017. “It’s a sad chapter in our proud history”, he admitted in 2019 when the group had paid its fine. “I was very angry, personally, to find the company in this position. I can promise you that the management team, myself included, is doing everything to make sure this can never happen once more. »
While the Swedish equipment manufacturer took advantage of the global breakthrough of 5G and the setbacks of its Chinese competitor Huawei – crippled by American sanctions – to gain market share and post record profits, this return of pans comes to spoil the party .
