Earlier this year, Ericsson announced that an internal investigation had revealed the company had potentially paid bribes to the terrorist group ISIS in Iraq as early as 2011. 
While the investigation is ongoing and the final recipient of many of these payments is unclear, it appears that the vendor had paid off terrorist organisations to secure their transport routes throughout the country…

Earlier this year, Ericsson announced that an internal investigation had revealed the company had potentially paid bribes to the terrorist group ISIS in Iraq as early as 2011. 

While the investigation is ongoing and the final recipient of many of these payments is unclear, it appears that the vendor had paid off terrorist organisations to secure their transport routes throughout the country. 

The immediate results of the revelations saw the company’s stock price collapse by around a third, with some analysts suggesting that the company risked become “uninvestable”.

Now, Ericsson says it is bracing itself for the inevitable fallout from the investigation, saying that it will likely be fined by the US Department of Justice for its handling of the investigation.

CEO Borje Ekholm said the company could not effectively estimate the size of financial penalties that may be applied but “Deu”was engaging with US authorities to resolve the situation.  

Any fine would be in addition to a $1 billion fine paid by Ericsson to the DoJ back in 2019 to settle bribery cases in various international markets.

Ultimately, however, a fine may be the best result that Ericsson can hope for, with other possible sanctions – even excluding Ericsson from the US market entirely – also being considered.

It also remains to be seen on whom the blame for the scandal ultimately falls.

In Ericsson’s Annual General Meeting last week, the company’s board of directors tabled a motion to grant a discharge of liability for five members of the board over the scandal. However, shareholders, including Cevian Capital and Norway’s sovereign wealth fund, voted down the motion, meaning that CEO Ekholm and other board members remain at risks of being found individually responsible and facing personal repercussions.

In related news, Ericsson earlier this week said it was suspending its business in Russia ‘indefinitely’, placing its roughly 600 staff in the country on paid leave. Their rival Nokia, a day later, also announced that they were withdrawing from the Russian market entirely, saying a continued presence in the country “would not be possible”.

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