Swedish telecom giant Ericsson management suffered a major loss of prestige last week when the company’s shareholders did not give the CEO Börje Ekholmille and other government discharge.
The public pension fund AP1, among others, gave its “no” vote.
Board members, major Swedish economic figures Jacob Wallenberg and Helena Stjernholm including, are now in an uncomfortable situation. They will have to consider how Ericsson shareholders could potentially seek compensation from themselves.
In the background is Ericsson’s Iraq riot, where the company is suspected of paying bribes to Isis. Ericsson itself has granted vague charges for using “alternative transportation routes” and to circumvent Iraqi tariffs. According to the company, it has not been able to verify to whom the money has ended up.
The situation is exacerbated by the U.S. Attorney General’s Office of the Attorney General.
Ericsson agreed to a previous corruption scandal in the Department of Justice in December 2019 and had to pay $ 1 billion in fines.
The U.S. Department of Justice now believes Ericsson should have disclosed information about the Iraqi Jupaka, for which the company’s own internal investigation was completed shortly before the settlement was reached. There is already speculation in the market about new fines.
The Iraq riot has been a media disaster for Ericsson. The mere fact that the company is suspected of paying bribes to Isis is appalling.
“The Iraq riot has been a media disaster for Ericsson.”
Now in Sweden, the prosecutor is investigating whether a preliminary investigation into the case should be opened. The crime report is made under the heading of aiding and abetting crimes against humanity.
Ericsson has managed to show outright arrogance towards both the media and its shareholders.
CEO Ekholm has emphasized transparency. He himself has shown such widespread openness that Uppdrag granskning, who studied Iraq jupaka, invited him for an interview with a full-page announcement in the Dagens industry on the day of the general meeting.
Interview requests for months when unanswered.
Ericsson’s major owner, activist investor Cevian Capital announced the day before Ericsson’s Annual General Meeting, the company announced a list of measures to restore market confidence in the company.
Cevian proposed that the Board abandon the special arrangement of two vice-chairmen, where the largest shareholders Investor and Industrivärden get their place. They have been held by Wallenberg and Stjernholm. In addition, Cevian believes that the composition of the Board’s compliance working group should have been changed.
The Ericsson board showed a long nose for the proposals. The seats were filled in the old model. Nothing changed. It was as if the government wanted to strike back from a “bold” discharge vote.
Repeated bribes and poor publicity management are no doubt felt in the staff as well. If Nokia not all engineering positions have been filled, so Ericsson has now created an opportunity for an honest robbery.
The author is Kauppalehti’s correspondent in Stockholm.