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Article

15 Feb 2022

Author:
Ericsson

Ericsson's statement on conduct in Iraq

"Update: Iraq media inquiries", 15 February 2022

In the past week, Ericsson (NASDAQ: ERIC), has continued to receive detailed media inquiries from Swedish and international news outlets. Their interest pertains to information detailed in a 2019 internal investigation by the company, on conduct in Iraq.

We are committed to transparency and continuously improving our compliance performance. Therefore, we are updating our earlier statement on this matter.

We continue to invest significantly to understand these matters fully. As in all investigations we cannot exclude the possibility that we may not have found all the underlying facts.

Ericsson takes any allegation of impropriety extremely seriously and welcomes any new facts brought to light as a result. This allows us to sharpen our processes further and target any wrongdoing.

We reiterate our commitment to investigate and take action as appropriate to address any new information, in line with our Code of Business Ethics and under the terms of our 2019 Deferred Prosecution Agreement (DPA), with US authorities.

With customers in more than 180 countries around the world, our products and services address critical communication needs for people and societies alike. We are committed to conducting business in a responsible manner, applying ethical standards in anti-corruption, humanitarian and human rights terms. We adhere to the United Nations’ guiding principles on business and human rights - as well as all relevant international laws...

About the Iraq investigation

Unusual expense claims in Iraq, dating back to 2018, triggered a review that uncovered compliance concerns about breaches of the company’s Code of Business Ethics. Investigations of these concerns led to a subsequent and detailed internal investigation that was undertaken by Ericsson in 2019, supported by external legal counsel.

The investigation included the conduct of Ericsson employees, vendors and suppliers in Iraq during the period 2011-2019. It found serious breaches of compliance rules and the Code of Business Ethics. It identified evidence of corruption-related misconduct, including: Making a monetary donation without a clear beneficiary; paying a supplier for work without a defined scope and documentation; using suppliers to make cash payments; funding inappropriate travel and expenses; and improper use of sales agents and consultants. In addition, it found violations of Ericsson’s internal financial controls; conflicts of interest; non-compliance with tax laws; and obstruction of the investigation.

The investigating team also identified payments to intermediaries and the use of alternate transport routes in connection with circumventing Iraqi Customs, at a time when terrorist organizations, including ISIS, controlled some transport routes. Investigators could not determine the ultimate recipients of these payments. Payment schemes and cash transactions that potentially created the risk of money laundering were also identified. 

Ericsson invested significant time and resources to understand these matters. The investigation could not identify that any Ericsson employee was directly involved in financing terrorist organizations.

As a result of the investigation, several employees were exited from the company and multiple other disciplinary and other remedial actions were taken. This included closing gaps in our internal processes in the region and incorporating lessons from the investigation into our ethics and compliance program.

Furthermore, Ericsson terminated a number of third-party relationships and prioritized the Iraq country business for enhanced training and awareness activities, policies and procedures, and third-party management processes.

Ericsson is continuing to work with external counsel to review the findings and remediation resulting from the 2019 investigation to identify any additional measures that the company should take...

Timeline