A group of 37 shareholders are suing Sweden’s Ericsson for a combined total of SEK 1.8 billion ($170 million) over claims the company withheld information regarding its internal investigation into its dealings in Iraq
A report by Dagens Industri says that the shareholders are seeking compensation after revelations of Ericsson’s potential wrongdoings in Iraq last year saw the company’s share price tumble.
Ericsson has been quick to dispute the shareholders’ claims, saying it will ‘defend itself vigorously in this matter’. The share price has since halved, to 52.71 crowns on Friday.
The report of the internal investigation, which published back in February 2022, saw Ericsson CEO Borjie Ekholm disclose “unusual expenses dating back to 2018” relating to their activities in Iraq, which may have included bribery payments to Iraqi terrorist groups.
Ericsson said that the money was used for access to alternative transport routes which avoided Iraqi customs.
“What we are seeing is that transport routes have been purchased through areas that have been controlled by terrorist organizations, including ISIS,” said Ekholm.
The report saw Ericsson’s share price collapse and now, over a year later, it still sits at roughly half the value it held before the report was released.
The Ericsson shareholders in question accuse the company of deliberately withholding the results of the company’s internal investigation for over two years, a move which they say breaches Market Abuse Regulations. These rules say that share issuers must promptly inform the public about relevant inside information, allowing them to make an accurate assessment.
Ericsson has been quick to dispute the shareholders’ claims, saying it “disputes the claims in their entirety itself vigorously in this matter”.
Ericsson is no stranger to accusations of corruption. In 2019, the firm was fined $1 billion by the US Department of Justice in one of the largest ever enforcements of the Foreign Corrupt Practices Act. Charges against Ericsson included bribing government officials in China, Vietnam, and Djibouti.
“Swedish telecom giant Ericsson has admitted to a years-long campaign of corruption in five countries to solidify its grip on telecommunications business,” said the US Department of Justice in 2019. “Through slush funds, bribes, gifts, and graft, Ericsson conducted telecom business with the guiding principle that ‘money talks.”
As part of the settlement with the US government, it was agreed that Ericsson would not face criminal conviction if it revealed all company wrongdoings and submitted itself to additional scrutiny. However, in March this year, it was revealed that Ericsson broke this deal by intentionally omitted details about its dealings with Iraq, leading to the company being fined another $206 million.
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