Swedish Telecom Giant Ericsson Caught Up in Iraq Corruption Scandal
A leaked internal report shows the Swedish telecom giant Ericsson concealed a years-long bribery and fraud campaign in the war-torn country and suspected that its corrupt practices had spread to more than a dozen others – and now following a burst of media coverage, an investigation and potential charges are underway.
The report reveals that the Swedish-based firm made tens of millions of dollars in suspicious payments over nearly a decade to sustain its business in Iraq, financing slush funds, trips abroad for defense officials and payoffs through middlemen to corporate executives and possibly terrorists.
The U.S. Department of Justice has told telecom giant Ericsson that it failed to disclose sufficient information about possible misconduct in Iraq before a 2019 criminal settlement, the company said.
The Swedish company also said the DOJ informed the company that it also “breached” the settlement by “failing to make subsequent disclosures” after signing it.
Shares in Ericsson fell 9% in Nasdaq Stock Market trading as investors fretted over the possible repercussions.
On a conference call with investors, financial analysts and journalists, Ericsson Chief Executive Börje Ekholm called the findings of wrongdoing in Iraq “hugely embarrassing” for the company and defended the steps it has taken to improve compliance.
“I know this is a difficult situation for all of you, but it’s equally serious for us and we take it very seriously,” he said. “The key is that we are on a journey, a culture journey… to root out bad performance. We are very committed to doing that.”
He added: “This is a very serious matter and both embarrassing and unacceptable misconduct.”