Telecom equipment producer Ericsson’s CEO Börje Ekholm accepted that the company’s “unusual expenses dating back to 2018” may have covered purchasing of transport passes to routes controlled by terrorist organisations, including the Islamic State.
The shockwaves of the admission caused the shares of the company plunge, losing as much as 14.5% in the stock market.
The admission is the outcome of a 2019 internal investigation that shed light on the conduct of the company’s employees in Iraq, in a period from 2011 to 2019, revealing “serious breaches of compliance rules and code of business ethics.”
The company is yet to determine the ultimate beneficiary owner of the payments and stated to have “terminated a number of third-party relationships” and prioritized the implementation of “enhanced trainings and awareness activities, policies and procedures, and third-party management processes.”
The admission compounded the effects of the latest corruption probe where Ericsson had pleaded guilty to bribery and corrupt practices in Asia and the Middle East.
Paying illegitimate actors on the field to gain access to transport routes had been the exact breach cement giant Lafarge had admitted to have committed in Syria..
The Telecom industry had been at the centre of regulatory pressure recently, with Chinese companies Huawei and ZTE being targeted and fined for selling equipment to Iran in violation of U.S. sanctions.
