Swedish telecommunications equipment supplier Ericsson may have made payments to terrorists organization Daesh in Iraq”in an effort to win access to iraqi market”, said son CEO Borje Ekholm.
Ericsson said on On February 15, a 2019 internal investigation had found “serious offences” of its compliance rules in Iraq from 2011 to 2019.
The Swedish telecom giant said he couldn’t identify if there were any of its employees haddirectlyfunded Daesh, the terrorist group also known as ISIS which controlled whole swathes of of Iraq in 2014 and 2015.
However, he said he identified payments to intermediaries and “use of alternative transport routes in link with bypassing Iraqi customs at a time when terrorist organizations, including (Daesh), controlled certain transport routes”.
Ekholm’s statements to a local financial tabloid quoted later by Bloomberg sent shares of Ericsson down through more more than 14% during trading like of Wednesday afternoon Swedish local time. The company was only recently fined $1 billion by the United States for pay bribes to obtain telecommunications contracts in five countries including Vietnam.
“Yes new the facts come to light … we are going for sure reopen the investigation and run this full speed coming to investigate these matters,” Ekholm said.
Ekholm’s excuse for don’t confess up earlier is that the transactions he uncovered from 2011 to 2019 did not match Ericsson’s “materiality” threshold.
It’s unlikely to sit well with the us department of Justice (DOJ), which takes a little view of nothing less than full disclosure in anti-corruption investigations. Considering the damage inflicted by Daesh on Western interests, including important civil interests and military victims, it goes also go down wrong with the general public. No wonder Ericsson shares fell more more than 10%, wiping out $4 billion off son market value.
He is possible which approximates the size of the GM penalty. The company’s 2019 settlement of $37 billion over graft in China, Vietnam, Indonesia, Kuwait and Djibouti made clear than the big size of the fine was partly due to Ericsson’s delay. Keep any Iraqi deception secret while in negotiations with the feds are clearly bad see.
Yet the market the reaction can also reflect the potential impact on from Ericsson strategy. Ekholm had been a beneficiary of Diplomatic push from Washington against Huawei Technologies, which pressed the Chinese tech group – most grand provider of 5G mobile phone kit – out of the United States and most European markets.
In the final quarter of last year Ericsson’s North American sales, which represent for almost a third of son turnover jumped 17% year-on-year. This more than compensated for the 800 millions of dollars decline in China, as demanded by Beijing revenge for Huawei on western equipment suppliers.
Along with Finland’s Nokia, the only other grand Western manufacturer of 5G kits, Ericsson’s position in America had seemed safe.
However, the South Korean Samsung Electronics is muscle in fast after catching up on a $6.6 billion supply contract with American carrier Verizon in 2020.
Amazon Web Services is also manufacturing moves. If Ekholm’s Iraqi mess leads to permanent mistrust in America like China, the fines will be the least of his problems.