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28 Feb 2022

Rob Evans and Michael Safi, The Guardian

Telecom giant Ericsson faces corruption allegations, as investigation shows co. paid bribes to ISIS in Iraq & endangered safety of contractors

See all tags Allegations

"Revealed: leaked files show how Ericsson allegedly helped bribe Islamic State", 27 February 2022

Confidential documents have revealed how the telecoms giant Ericsson is alleged to have helped pay bribes to the Islamic State terrorist group in order to continue selling its services after the militants seized control of large parts of Iraq.

The leak of internal investigations at Ericsson, which also found that the firm had put its contractors at risk and allowed them to be kidnapped by the militants, is potentially damaging for the multinational.

In addition to the findings about the alleged payments to IS, the investigations uncovered allegations the company was involved in corruption in at least 10 countries across four continents.

That would suggest a pattern of wrongdoing by Ericsson that is far wider than what the telecoms giant publicly admitted to in 2019, when it entered into a $1bn (£750m) settlement with the US Department of Justice (DoJ)...

...Two weeks ago, Ericsson’s stock price plunged by 14% when, alerted to the fact media organisations had been leaked the internal reports, it released a public statement admitting to “serious breaches of compliance rules” in Iraq between 2011 and 2019.

Since then the telecoms firm has been bracing for the full disclosure of the reports, which were leaked to the International Consortium of Investigative Journalists (ICIJ) which then shared them with media partners including the BBC, the Washington Post and the Guardian.

The leaked documents, running to 101 pages, were produced in 2019 and 2020. They record the results of internal investigations commissioned by Ericsson into alleged corruption by the company around the world.

Investigators concluded that the multinational firm was likely to have been involved in channelling bribes to IS to allow its products to be transported across parts of Iraq that were held by the terrorists.

The payments were made through a slush fund run by contractors working for the Swedish multinational, according to the investigators...

...In the statement, Ericsson said the investigating team had “identified payments to intermediaries and the use of alternate transport routes in connection with circumventing Iraqi customs, at a time when terrorist organisations, including Islamic State, 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 said it had published the statement because it was “committed to transparency”. Nevertheless, the telecoms giant declined to answer multiple questions from the Guardian, ICIJ and other media, including about potential wrongdoing in several countries that were not mentioned in its 2019 settlement with the DoJ...

The leaked documents also show how Ericsson jeopardised their contractors in Iraq in the pursuit of profits, as managers strove to continue the firm’s commercial operations even after IS took control of Mosul.

According to investigators, emails showed “this persistence resulted in the kidnapping of [contractors] while doing fieldwork for Ericsson”. The investigators added that even after the kidnapping, Ericsson sought to carry on doing business in the area...