Ericsson shares drop after Iraq payments probe finds breach of rules

Shares in Ericsson fell sharply after Borje Ekholm, chief executive of the Swedish telecoms equipment maker, conceded it could have made payments to terrorist organization Isis in Iraq.

Ericsson said late on Tuesday that an internal investigation from 2019 had found serious breaches of compliance rules in Iraq including payments for transport routes to evade local customs.

“What we are seeing is that transport routes have been purchased through areas that have been controlled by terrorist organizations, including Isis,” Ekholm told Swedish newspaper Dagens Industri on Wednesday.

Shares in Ericsson fell as much as 8.5 per cent on Wednesday and were down 7 per cent in mid-morning trade.

Ericsson paid more than $ 1bn in December 2019 to settle US criminal and civil investigations into foreign corruption in countries spanning China, Indonesia, Vietnam, Djibouti and Kuwait.

But the Swedish group said in October that the US Department of Justice had warned it had breached its obligations under a deferred prosecution agreement by failing to provide documents and information. It is unclear whether the allegations in Iraq formed part of the breach but the country was not one of five named in the 2019 settlement.

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