Governance advisor Glass Lewis wants Ekholm to be removed
Ericsson chairman Ronnie Leten has disclosed that a comprehensive review over the company’s conduct relating to Iraq, and how it was subsequently addressed, is under way.
The review will be led by its new chief legal officer Scott Dresser, previously Veon’s general counsel for the last eight years. Dresser’s predecessor Xavier Dedullen was Ericcson’s chief legal officer from 2018, during the time of the alleged malpractice.Â
Ericsson has been mired in a scandal in recent weeks over potential payments to the Islamic State in Iraq and failing to fully disclose details of its investigation the US Department of Justice (DoJ) as part of a 2019 agreement. In 2019, Ericsson agreed to pay $1 billion to settle a US case, one of the largest financial penalties ever for corporate fraud.
New allegations then emerged. According to the International Consortium of Investigative Journalists (ICIJ) Ericsson asked terror group Islamic State for permission to work in Iraq and Syria and to work in an ISIS-controlled city. The telco equipment maker then paid protection money to smuggle its equipment through ISIS-held zones on a route known as The Speedway, according to an internal Ericsson probe.
The report, obtained by the ICIJ, reveals Ericsson paid out tens of millions of dollars in suspicious transactions in Iraq, financing slush funds, trips abroad for Swedish defence officials, payoffs to executives at customers and possibly terrorists. These documents are the basis of ICIJ’s Ericsson List investigation.
“The Company continues to coordinate with the DOJ and other relevant authorities,” said Ericsson chairman Leten. Chief executive officer Borje Ekholm, who has been criticised for not disclosing its probe into corruption in Iraq, has the full confidence of the board, said Leten. However, US proxy governance advisory service firm Glass Lewis has recommended shareholders vote to remove Ekholm from the board ahead of the company’s annual general meeting on March 29.