Ericsson ‘may have paid ISIS’ in Iraq, as probe finds serious breaches

Shares in the telecoms giant plummeted by 9%

Ericsson said it may have made payments to ISIS in connection with circumventing Iraqi Customs. Reuters

Ericsson may have made payments to terror group ISIS to gain access to transport routes in Iraq, the company’s chief executive has admitted.

An internal investigation carried out by the Swedish firm, one of the world's biggest makers of mobile network equipment, found “serious breaches of compliance rules”.

The probe identified payments made to use alternate transport routes in connection with circumventing Iraqi Customs, at a time when terrorist groups, including ISIS, controlled territory through which goods passed.

Chief executive Borje Ekholm said he could not rule out ISIS payments, but insisted the firm did not tolerate “financial terrorism”.

He said the probe had identified “unusual expenses dating back to 2018” but the company has yet to determine who the final recipient of the money was.

“What we are seeing is that transport routes have been purchased through areas that have been controlled by terrorist organisations, including ISIS,” he told Dagens Industry, a Swedish financial newspaper.

Shares in the Stockholm-based firm fell as much as 9 per cent in early trading Wednesday, the steepest dive since July.

Mr Ekholm’s comments follow a statement by the telecoms equipment maker late on Tuesday, in which it said it continued to “invest significantly” into an investigation regarding compliance concerns in its Iraq-based operations.

The news of the internal inspection is yet another embarrassment for the company following a long-running corruption probe. In 2019 it agreed to pay $1 billion to resolve allegations of bribery. The firm had “admitted to a years-long campaign of corruption in five countries to solidify its grip on telecommunications business”. The countries were Kuwait, Djibouti, China, Vietnam and Indonesia.

The issue resurfaced last October after the US Department of Justice accused the telecoms giant of breaching the agreement by failing to provide certain documents to department officials.

The latest suspected payments probably formed part of the same corruption probe, according to analysts at Swedish bank Handelsbanken. The analysts do not expect the revelations to trigger further investigations.

Mr Ekholm said that Ericsson has spent “considerable resources trying to understand this as best we can”.

“Financing terrorism is completely unacceptable and something we do not allow at all,” he said.