Ericsson shares fall after CEO says firm may have paid ISIS

To gain access to certain transport routes in Iraq.
Borje Ekholm, chief executive officer of Ericsson AB. Image: Bloomberg

Ericsson may have made payments to the ISIS terror organisation to gain access to certain transport routes in Iraq, the company’s chief executive officer Borje Ekholm told newspaper Dagens Industri.

Shares in the Stockholm-based company fell as much as 8.5% in early trading Wednesday, the most since July.

In an interview with the business daily, the CEO said that Ericsson had identified “unusual expenses dating back to 2018” but the company hasn’t yet determined who the final recipient of the money was. “What we are seeing is that transport routes have been purchased through areas that have been controlled by terrorist organizations, including ISIS,” Ekholm added.

Ekholm’s comments follow a statement by the telecommunications equipment manufacturer late on Tuesday, in which the company said that it continues to “invest significantly” into a probe regarding compliance concerns in its Iraq-based operations.

A spokesperson for Ericsson declined to comment when contacted by Bloomberg News.

The news of the internal investigation adds another embarrassment for the company following a long running corruption probe, including a $1 billion settlement in 2019. A unit of Ericsson AB pleaded guilty to a years-long campaign of bribery and corruption in Asia and the Middle East. In October last year, the matter resurfaced, after US Department of Justice accused the company of breaching the agreement by failing to provide certain documents to the DOJ.

The new suspect payments likely formed part of the same corruption probe, according to analysts at Handelsbanken. And while the analysts don’t expect the revelations to trigger further investigations, “it is likely to harm the stock price” when trading starts, they wrote in a client note.

Ekholm told the newspaper that Ericsson has spent “considerable resources trying to understand this as best we can. Financing terrorism is completely unacceptable and something we do not allow at all.”

© 2022 Bloomberg

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