Telecom equipment giant Ericsson bribed officials and paid protection money to grow its business in Iraq, according to new reporting from the International Consortium of Investigative Journalists.

Phil Harvey, Editor-in-Chief

February 28, 2022

4 Min Read
New report fills in details about Ericsson's Iraq scandal

This week, as Ericsson makes its return to form at Mobile World Congress, the company may find itself the topic of many conversations that have nothing to do with 5G or any of the demos on its stand.

Folks at the show might want to know how far-reaching the fallout will be from Ericsson's most recent corruption revelations.

Earlier this month, Ericsson tried to get ahead of the story by providing some commentary about findings related to the company's dealings in Iraq. What Ericsson noted in its press release was embarrassing, but just the tip of the iceberg.

This weekend the International Consortium of Investigative Journalists (ICIJ) released reporting that summarizes and explains a trove of leaked internal documents from Ericsson. The leak, called The Ericsson List, reveals Ericsson's business practices in Iraq and several other countries where it made suspicious payments to win contracts and employed dodgy financial practices to cover its tracks.

The ICIJ's story about its investigation provided this high-level summary: "The Ericsson List investigation showed, among other things, that Ericsson had sought permission from the terrorist group known as the Islamic State, or ISIS, to work in an ISIS-controlled city and paid to smuggle equipment into ISIS areas on a route known as the 'Speedway.'"

Who was in charge while all this went down? According to the ICIJ, the leaked documents say that in 2019, Ericsson started looking at alleged corrupt practices in 15 countries dating back to 2011. Hans Vestberg, who is currently the chief executive at Verizon, was CFO at Ericsson from 2007 to 2009, and then he presided as CEO for more than six years.

Ericsson's current CEO, Börje Ekholm, took over after Vestberg left. Ekholm became CEO in January 2017 and, before that, was on Ericsson's board for more than a decade. The most recent internal investigation was started on his watch, and he has, at the very least, been sitting on the info about Ericsson's dealings in Iraq during his predecessor's tenure.

The decision to try to bury the Iraq news – and the likelihood that Ericsson's management is sitting on much, much more – could scare off investors. According to the ICIJ, Citibank sent a research note to clients on Sunday evening warning that Ericsson risks its shares being "uninvestable" in the near future because of the scandal.

It's not likely we'll see Ekholm discuss any of this, even as Ericsson touts its commitment to "transparency." He has "refused to make himself available to journalists involved in the ICIJ project," according to yesterday's story in The Washington Post.

Not the first time

Ericsson has already been through the wringer as the poster child of corporate corruption. In late 2019, the US Justice Department announced that the company agreed to pay a $1 billion penalty for violating the Foreign Corrupt Practices Act (FCPA).

The US investigation that wrapped up in 2019 covered Ericsson's activities: It paid bribes, cooked books and generally ran its business like an organized crime family. But that investigation only covered the company's criminal conduct in Djibouti, China, Vietnam, Indonesia and Kuwait from 2000 to about 2016 or so.

What was not covered in the US investigation were Ericsson's dealings in Iraq, where it might have been working with the world's most notorious terrorists the same way it worked with any other governing municipality.

Elsewhere around the globe, the ICIJ's report notes, Ericsson did its own internal investigation and found all kinds of shady stuff going on, but buried the news.

"Ericsson conducted other internal probes of alleged misconduct in Lebanon, Spain, Portugal and Egypt. In addition, a spreadsheet lists undisclosed company probes into possible bribery, money laundering and embezzlement by employees in Angola, Azerbaijan, Bahrain, Brazil, China, Croatia, Libya, Morocco, the United States and South Africa," said the ICIJ.

As Ericsson executives take center stage this week at Mobile World Congress to brag about the company's 5G prowess, attendees can take them at their word when they say that nothing will stop them from winning more business and taking market share.

Also, it is worth noting that no Ericsson executives to date have ever been charged with anything related to the company's (previously) well-hidden and wide-ranging culture of corruption.

Ericsson shares today were down $0.88 (8.65%) to $9.24. The stock has lost about 15% of its value since the beginning of the year.

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Phil Harvey, Editor-in-Chief, Light Reading

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About the Author(s)

Phil Harvey

Editor-in-Chief, Light Reading

Phil Harvey has been a Light Reading writer and editor for more than 18 years combined. He began his second tour as the site's chief editor in April 2020.

His interest in speed and scale means he often covers optical networking and the foundational technologies powering the modern Internet.

Harvey covered networking, Internet infrastructure and dot-com mania in the late 90s for Silicon Valley magazines like UPSIDE and Red Herring before joining Light Reading (for the first time) in late 2000.

After moving to the Republic of Texas, Harvey spent eight years as a contributing tech writer for D CEO magazine, producing columns about tech advances in everything from supercomputing to cellphone recycling.

Harvey is an avid photographer and camera collector – if you accept that compulsive shopping and "collecting" are the same.

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