The scandal of leaking secret investigations into the Swedish telecommunications company, Ericsson, continues to interact between the capitals of ten countries on four continents. and violations of the CoBE Code of Business Ethics.
According to several press sources, the number of leaked documents on the results of internal investigations commissioned by Ericsson into allegations of corruption by the company around the world reached 101 pages in 2019 and 2020. The share of the group ranked second in the world in the field of communications devices, which was already damaged by this file in recent weeks, fell by more than ten percent in the first exchanges on the Stockholm Stock Exchange.
Headquartered in Stockholm, Ericsson employs 100,000 people and sells telecom equipment in 180 countries. It also plays a leading role in the development of the next generation of 5G mobile technology in the UK.
The internal investigation was conducted by the company after a US court fined it $1 billion for violating the US Foreign Corrupt Practices Act (FCPA) during its illegal activities in Djibouti, China, Vietnam, Indonesia and Kuwait, noting that the US court ruling did not include the company's work in Iraq and Lebanon.
Lebanese scandals
Ericsson's internal documents, obtained by the International Consortium of Investigative Journalists ICIJ and shared with more than 110 journalists, from 30 press organizations in 22 countries around the world, reveal that the European company is involved in illegal behavior in Lebanon such as offering bribes and violations of the Code of Business Ethics.
These documents include information contained in the internal investigations about suspicions related to corruption, about giving Ericsson gifts amounting to thousands of dollars between 2010 and 2019 to officials in the telecommunications sector in Lebanon, including managers in the “Alfa” company, and among these gifts were cash and travel trips. At the company’s expense to ministers and advisers, 122 phones and modern communications devices, according to the documents, which also stated that between 2010 and 2014, 40 gifts were purchased for customers with a total value of $37.5 thousand for members of the Lebanese Ministry of Communications.
On the other hand, the media office of the current Lebanese Minister of Communications, Johnny Al-Qarm, indicated that he is following up through the media the published documents, stressing that the ministry does not have sufficient data to act judicially, stressing legal action if necessary, stressing that his current administration has nothing to do with it in any way. With documents or investigations related to the previous administration.
Information indicates that a number of the personalities mentioned in the documents went to file lawsuits against Ericsson.
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Detour and overruns
In this context, Roland Abi Negm, the consultant in information security and digital transformation, indicated that Ericsson is one of the largest telecommunications companies in the world, and it is also considered a major player in launching 5G networks in the United Kingdom, after it replaced the Chinese telecom company “Huawei.” , which has been discontinued due to security concerns.
He explained that the bribery scandals that usually affect giant companies operating in the field of communications aim to circumvent local laws and customs evasion regarding communications equipment, on which countries impose high controls and taxes, in addition to the possibility of conflict with military and security matters, in addition to some equipment of the 5G networks that It may affect the frequencies of civil aviation, as this equipment is supposed to be far from the vicinity of airports, and therefore the payment of bribes helps to bypass regulatory matters and public safety procedures and save in licensing and tax procedures.
He added that when any company seeks to obtain contracts with countries, especially with third world countries, bribes help in the issue of bypassing transparent bids, and therefore sometimes those in charge of the matter submit a book of conditions and technical specifications to measure the company to which the contract is to be awarded exclusively.
Iraq and ISIS
In Iraq, the leaked documents revealed that “Ericsson” turned on the direct relationship with the corrupt through intermediary companies that evaded taxes and fees and established relations with de facto forces, including ISIS, where it monitored a financial relationship linking the Swedish company indirectly to the organization during its rule. For areas in northern Iraq between 2014 and 2017, especially the city of Mosul, which the company did not rule out according to what was stated in its internal investigation, at a time when Ericsson’s total net sales between 2011-2018 amounted to about $1.9 billion in Iraq.
At a time when the Iraqi Ministry of Communications refused to comment on the leaked documents because they did not have sufficient data, the Iraqi political activist, Nabil Jabbar Al-Ali, indicated that there does not seem to be legal accountability for Ericsson clients, expecting that the attorney general will not file lawsuits against the abuses During the organization's control of two-thirds of the country, it took place, and accordingly, the circumstances that accompanied the stage will be considered, ruling out at the same time "any legal consequences for everything that happened, as the international company continues its work inside Iraq."
He pointed out that companies and institutions operating within Iraq, and Mosul in particular, "the performance of their customers was similar to that of Ericsson's customers," adding, "When gangs control, it is natural that this is the nature of the work environment!"
The work environment under the rule of the organization, according to Al-Ali, highlighted “three types of defects in the Ericsson report, which are evasion of customs duties, tax evasion and royalties,” explaining that customs evasion by changing the path for the entry of goods into the Kurdistan region is a common and well-known case in Iraq, and is carried out by most Companies and traders because there are differences in customs duties between the official outlets and the outlets managed by the Kurdistan region.
As for tax evasion, in his opinion, it is done by refraining from providing final accounts for all contracts, especially when it comes to contracts with the private sector and not directly with the state. According to him.
As for the third defect, i.e. royalties, its importance lies, according to Al-Ali, “in the impossibility of not yielding to it by all institutions, whether small, large or global operating within the scope of ISIS’s control, which it imposes by force to conduct its life and daily affairs,” stressing that royalties formed part of the abuses that It has Ericsson agents.
On the other hand, Al-Jabbar explained that the initiative came from Ericsson itself, as it took the decision to open an investigation and reveal corruption cases related to its agents in Iraq, out of transparency and disclaimer of responsibility. The company was under the control of ISIS. And he continues, "As for its strict measures against its agents at the time, it fits into this framework," explaining that "Ericsson" is only concerned with supplying equipment and establishing communications infrastructure, and has implemented contracts in partnership with two telecommunications companies in Iraq.
Ericsson's response
A New York court filing said on Friday that the company, its CEO and chief financial officer, was listed as accused in a class action lawsuit in the United States, for misleading investors about the company's dealings in Iraq.
The lawsuit, filed by the law firm Pomerantz in New York's Eastern District Court, alleges that Ericsson misled investors, among other things, by overestimating the extent to which it ruled the use of kickbacks.
Ericsson said in a statement on Friday that the company's name and "certain officials" of the company were listed as defendants in a class action lawsuit in the United States for making false and misleading statements about the company's business in Iraq, according to Reuters.
The US Department of Justice said on Wednesday that the company had failed to fully disclose details of its operations in Iraq in violation of a 2019 agreement.
"The complaint alleges violations of US securities laws in connection with allegedly false and misleading statements, primarily related to the company's compliance and disclosure policies, obligations and conduct of business in Iraq," Ericsson said in a brief statement.
