Ericsson exec resigns over Islamic State group payment claims

US DoJ investigation claims Swedish telco giant "failed to disclose" misconduct in Iraq during bribery settlement

Trade

Image: Ekaterina-Bolovtsova via Pexels

7 April 2022

Ericsson has announced the departure of senior vice president Peter Laurin, just a week after a shareholder revolt against the company’s alleged involvement in payments to the Islamic State group.

Laurin, who has been with Ericsson since 2001 and part of its executive team since 2017, was the head of its business area managed services division where he oversaw network operations around the world. He will leave in August to head automation start-up Piab.

“Peter has been instrumental in turning around and transforming our managed services business and successfully led Ericsson’s digitalisation and IT journey. He is a valued member of the Ericsson leadership team and I wish Peter all the very best in this new role as CEO of Piab,” said Ericsson’s president and CEO Börje Ekholm.

At an Ericsson AGM meeting last week, shareholders, led by activist Cevian Capital, voted against granting a discharge to the company’s board members and Ekholm, which would have released them of liability.

Cevian, which is also unhappy with the way the company has been run, is principally concerned with an ongoing investigation by the US Department of Justice (DoJ) over “unusual expense claims in Iraq”, which date back to 2018. The revolt means that Ericsson’s top executives can be held personally liable under Swedish law if the DoJ finds any evidence of wrongdoing.

Laurin was in charge of Ericsson’s business area managed services in 2018 and his role involved managing network operations in other countries. In 2019, the telecoms giant agreed on a settlement with the DoJ over international bribery claims. The company was accused of illegally paying officials in certain territories so that it could continue to operate in the region.

However, Ekholm has confirmed that the DoJ has informed Ericsson that it failed to disclose “sufficient information” about possible misconduct in Iraq prior to the settlement.

The accusation is that Ericsson sought permission from affiliates of the Islamic State group or representatives to work in cities it controlled. It claims that the company made multi-million dollar payments over a decade to sustain its business in the country which could have inadvertently financed terrorist operations.

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