Ericsson and its CEO sued in US court over questionable activities in Iraq

Swedish company's chief financial officer also named a defendant in a lawsuit for misleading investors

Borje Ekholm, chief executive of Ericsson, which is at the centre of a scandal over potential payments to the terrorist group ISIS in Iraq. EPA

Swedish telecoms company Ericsson, chief executive Borje Ekholm and its chief financial officer have been named as defendants in a US class action lawsuit for misleading investors about the company's dealings in Iraq, a filing to a New York court said on Friday.

Ericsson is at the centre of a scandal over potential payments to the terrorist group ISIS in Iraq. On Wednesday, the US Department of Justice said it was in breach of a 2019 deferred prosecution agreement (DPA) for failing to fully disclose details of its operations in Iraq.

The filing, by law firm Pomerantz to the District Court of Eastern District of New York, said that Ericsson among other things had misled investors by overstating the extent to which it had eliminated the use of bribes.

Ericsson said in a statement that it and "certain [company] officers" had been named as defendants in connection with "allegedly false and misleading statements" concerning Iraq.

Under the conditions of the 2019 DPA, Ericsson paid more than $1 billion to resolve a series of corruption investigations, involving bribery in China, Vietnam and Djibouti, and agreed to co-operate with the department for investigations.

Ericsson has lost almost a third of its market value since media reports of the alleged bribes broke in February.

Ericsson said that an internal investigation, which ended in 2019 but was only made public in February after media inquiries, had identified payments designed to circumvent Iraqi customs at a time when extremist organisations, including ISIS, controlled some routes.