Ericsson Says New US Fines Likely Over Iraq Corruption

Swedish telecoms equipment giant Ericsson said Thursday it will likely have to pay new fines to the US Department of Justice over suspected bribes to the Islamic State group in Iraq.

Chief executive Borje Ekholm conceded in a newspaper interview in February that some of Ericsson employees may have bribed IS members for road transport through areas controlled by the group in Iraq.

The admission was made before the publication of a report by the International Consortium of Investigative Journalists (ICIJ) revealing that an internal Ericsson investigation from 2019 was never made public.

The internal probe had identified possible corruption between 2011 and 2019 in the group's Iraqi operations.

In the company's quarterly earnings statement on Thursday, Ekholm said Ericsson was "fully committed to cooperating" with the US Department of Justice.

"The resolution of these matters could result in a range of actions by DOJ, and may likely include additional monetary payments, the magnitude of which cannot at this time be reliably estimated," he said.

The Swedish firm's shares have lost almost a quarter of their value since mid-February.

Ericsson already agreed to pay $1 billion (roughly Rs. 7615.02 crore) in penalties to US authorities to close corruption cases in Djibouti, China, Vietnam, Indonesia and Kuwait in 2019.

Ekholm said in the statement that the company was "limited in what we can say" about the events in Iraq, but he said in March that it was "a very serious matter, and involves embarrassing and unacceptable conduct in the past".

In its earnings statement, Ericsson reported that net profit fell eight percent to SEK 2.9 billion (roughly Rs. 2337.5210 crore).

The company had announced on Monday that it would set aside provisions of SEK 900 million to cover the financial hit from its suspension of activities in Russia following Moscow's invasion of Ukraine.

Ericssons first-quarter sales beat expectations but its operating profit of SEK 4.7 billion kronor was below an estimate by analysts surveyed by Bloomberg News.