Ericsson Confirms SEC Investigation Over Iraq Conduct
Swedish firm says it is “fully co-operating” with the US SEC, after it opened an investigation of Ericsson’s conduct in Iraq in 2019
The US Securities and Exchange Commission (SEC) has opened up an investigation of Swedish telecommunications equipment giant Ericsson.
The firm confirmed the development, and said it was “fully cooperating with the SEC,” over the matter.
It was back in December 2019 when the US DoJ said that Ericsson had agreed to pay more than $1 billion (£760m) to settle a probe into alleged corruption including bribing public officials.
Increased fine?
At the time, the company “admitted to a years-long campaign of corruption in five countries to solidify its grip on telecommunications business“, the agency said.
The DoJ said at the time that Ericsson’s corrupt activities had extended from at least 2000 to 2016 in countries including Djibouti, China, Vietnam, Indonesia and Kuwait.
The settlement, believed to be one of the highest ever under the US’ Foreign Corrupt Practices Act (FCPA), includes a $520m criminal penalty to the justice department and a payment of $540m to the Securities and Exchange Commission (SEC).
But now the SEC has started a separate investigation into the company’s handling of misconduct in Iraq.
News of this development sent shares of Ericsson down 2.4 percent on Friday, over investor concern of an increased SEC fine.
The Department of Justice (DoJ) had already begun its own investigation into the matter.
Iraq behaviour
“As previously announced, Ericsson has been engaged with authorities regarding the review and investigation of the Company’s conduct in Iraq,” the Swedish firm said on Thursday. “The United States Securities and Exchange Commission (SEC) has notified the Company that it has opened an investigation concerning the matters described in the company’s 2019 Iraq investigation report.”
“It is too early to determine or predict the outcome of the investigation, but Ericsson is fully cooperating with the SEC,” it said.
The controversy broke in February this year, relates to Ericsson’s own investigation in 2019. This probe found payments had been made to the Islamic State militant group in Iraq.
But while this misconduct did not take place under the current management, Ericsson did not share the entire report with the DoJ, prompting it to investigate.
Angry investors voted against discharging board members of liability for 2021. The board members could be held personally liable for their actions.
There is concern that the investigation could even potentially derail Ericsson’s $6.2 billion deal to buy US cloud communications firm Vonage.
