Ericsson's stock plummets after its CEO admits that the company may have paid terrorist group Isis
Yesterday, shares in Ericsson, a Swedish telecommunications company, plummeted after its CEO, Borje Ekholm, revealed that the company may have made payments to the terrorist group Isis in Iraq.
Mr Ekholm said on Tuesday that an internal investigation into the company's compliance framework in Iraq from 2019 revealed serious breaches, including evidence of the purchase of transport routes to avoid local customs.
"What we are seeing is that transport routes have been purchased through areas that have been controlled by terrorist organisations, including Isis," Mr Ekholm told Swedish newspaper Dagens Industri.
As a result, Ericsson's stock price fell dramatically by 14% on Wednesday.
Unusual expense claims from 2018 are thought to have prompted an internal investigation into "corruption-related misconduct." Donations without a clear beneficiary, payment of suppliers without invoices, cash payments, inappropriate travel and expenses, and non-compliance with tax laws were among them.
Although the company's investigators were unable to determine the ultimate recipients of transportation payments, they concluded that Isis and other terror groups controlled some of these routes at the time of travel.
According to the investigation, cash payments "potentially created the risk of money laundering" and Ericsson was unable to "identify that any Ericsson employee was directly involved in financing terrorist organisation." Several employees, on the other hand, "were exited from the company."
According to the Financial Times, the 5G network provider previously paid out more than $1 billion in December 2019 to settle a criminal and civil investigation into foreign corruption by US authorities in China, Indonesia, Vietnam, Djibouti, and Kuwait.
Mr Ekholm told the Financial Times that being in this situation was "an embarrassment." "You find yourself with an echo, a shadow of the past," he continued. "At the same time, it’s fair to say we’re on a journey to change the culture. One element of that journey is to deal with the past."
By fLEXI tEAM