Swedish telecom giant Ericsson, its CEO Börje Ekholm, and CFO Carl Mellander have been sued in a class action lawsuit in New York, the company said in an addendum to its annual report published the day before.
According to the company, the lawsuit concerns allegedly erroneous and misleading statements in connection with, among other things, operations in Iraq.
The filing with the District Court for the Eastern District of New York by law firm Pomerantz, however, said that Ericsson had misled investors by overstating the extent to which it had eliminated the use of bribes.
As part of an investigative effort, in late February, national broadcaster SVT shed light on Ericsson's operations in, among other places, Iraq. Per an internal investigation from 2019, which Ericsson kept secret from shareholders until recently, the company may have paid money to the terrorist organisation Daesh to gain access to certain transport routes in Iraq. Some of the payments were designed to circumvent Iraqi customs at a time when the territory was controlled by terrorist and militant organisations.
Together with the journalistic organisation ICIJ, SVT also published information from internal documents within the company that showed suspected bribery in a dozen other countries between 2017 and 2019. These involve slush funds in Lebanon, bribes allegedly paid in Bahrain and Angola, corrupt practices during the awarding of a contract in South Africa, and the fraudulent acquisition of a company in the US. More evidence of misconduct was purportedly discovered in Brazil, Azerbaijan, Libya, and Morocco, information that had not previously been known.
In 2019, Ericsson agreed to pay more than $1 billion to resolve a series of corruption probes in the US, involving bribery in China, Vietnam, and Djibouti, and agreed to cooperate with the Department of Justice in ongoing investigations.
In 2019, Ericsson agreed to pay more than $1 billion to resolve a series of corruption probes in the US, involving bribery in China, Vietnam, and Djibouti, and agreed to cooperate with the Department of Justice in ongoing investigations.
Since the media reports about the previously undisclosed alleged bribes, possibly involving Daesh, broke in February, Ericsson has lost almost a third of its market value.
Founded in 1876, the Stockholm-headquartered telecom giant Ericsson sells infrastructure, software, and services in information and communications technology and is seen as one of the world's leaders in 5G. It employs around 100,000 people and operates in over 180 countries.
*Daesh is a terrorist organisation banned in Russia and many other nations.