Ericsson says new US fines likely over Iraq corruption

Swedish telecoms equipment giant Ericsson said Thursday it will probably need to pay new fines to the US Department of Justice over suspected bribes to the Islamic State bunch in Iraq.

CEO Borje Ekholm conceded newspaper interview in February that some of Ericsson representatives might have bribed IS members for road transport through regions constrained by the gathering in Iraq.

The affirmation was made before the publication of a report by the International Consortium of Investigative Journalists (ICIJ) uncovering that an inside Ericsson investigation from 2019 was rarely unveiled.

The internal probe had identified possible corruption between 2011 and 2019 in the group’s Iraqi operations.

In the company’s quarterly earnings statement on Thursday, Ekholm said Ericsson was “fully committed to cooperating” with the US Department of Justice.

“The resolution of these matters could result in a range of actions by DOJ, and may likely include additional monetary payments, the magnitude of which cannot at this time be reliably estimated,” he said.

Following the announcement, shares in the telecom giant tumbled over six percent in the early hours of trading on the Stockholm stock exchange.

The Swedish firm’s shares have lost almost a quarter of their value since mid-February.

Ericsson already agreed to pay $1 billion in penalties to US authorities to close corruption cases in Djibouti, China, Vietnam, Indonesia and Kuwait in 2019.

Ekholm said in Thursday’s statement that the company was “limited in what we can say” about the events in Iraq, but he said in March that it was “a very serious matter, and involves embarrassing and unacceptable conduct in the past”.

At the Ericsson’s annual meeting in late March, shareholders voted against discharging Ekholm and the board from liabilities, a normally routine decision.

Both Ekholm and board members were nonetheless re-elected to their positions.

In its earnings statement, Ericsson reported that net profit fell eight percent to 2.9 billion Swedish kronor (280 million euros, $307 million).

The organization had reported on Monday that it would save arrangements of 900 million kronor to cover the financial hit from its suspension of exercises in Russia following Moscow’s invasion of Ukraine.

Ericsson’s first-quarter deals beat expectations however its working benefit of 4.7 billion kronor was under a gauge by investigators studied by Bloomberg News.