Ericsson continues review into Islamic State payments whilst chairman backs Borje Ekholm as CEO

Ericsson chairman Ronnie Leten said this morning that a comprehensive review is underway following the company’s conduct relating to Iraq and how it was handled internally.

Shares plunged last month, and more than $5bn was wiped from Ericsson’s market value, after the telecom gear maker said it may have made payments to ISIS based on “unusual expense claims in Iraq” dating back to 2018.

In a lengthy statement on the company’s website, Ericsson said that during an internal investigation it identified payments made to intermediaries, as well as the use of alternate transport routes in connection with “circumventing Iraqi Customs at a time when terrorist organizations, including ISIS, controlled some transport routes”.

Ericsson’s chief exec Borje Ekholm also told the newspaper Dagens Industri at the time that the firm hadn’t been able to determine the final recipients of these payments.

Some of these activities in question include employees making donations without a clear beneficiary and paying suppliers without proof of documents.

However, the firm said it “could not identify that any Ericsson employee was directly involved in financing terrorist organisations”, but stated that some employees “were exited from the company”.

A leaked Ericsson report seen by BBC News Arabic last month also revealed that Ericsson put contractors’ lives at risk by insisting they continued working in territory controlled by the Islamic State group in Iraq, resulting in workers being kidnapped by militants.

Leten said this morning that the review was being headed by the company’s new chief legal officer, Scott Dresser, who has been Veon’s general counsel for the last eight years. He replaced Xavier Dedullen, who was in the role since 2018.

Leten also revealed that chief exec Ekholm has the full confidence of the board despite proxy firm Glass Lewis’ recommendation that shareholders vote to remove him ahead of the annual general meeting on March 29.

Ericsson is a key player in the rollout of 5G networks in the UK, having replaced Chinese telecoms firm Huawei after security concerns.

Source: City AM