ICYMI: Appearing in the same sentence as Islamic State is a bad day at the office for any company. It’s especially troubling for Ericsson, writes edwardcropley
Ericsson CEO Börje Ekholm holds a news conference during the Mobile World Congress in Barcelona, Spain, February 26, 2018. REUTERS/Yves HermanLONDON, Feb 16 - Appearing in the same sentence as Islamic State is a bad day at the office for any company. It’s especially troubling for Ericsson
, which was only recently fined $1 billion by the United States for paying bribes to secure telecommunications contracts in five countries including Vietnam. Chief Executive Börje Ekholm’s disclosure on Tuesday that payments in Iraq may have ended up in the hands of the militant group makes things much worse.
Ekholm’s excuse for not fessing up earlier is that the transactions it uncovered from 2011 to 2019 didn’t meet Ericsson’s “materiality” threshold. That’s unlikely to sit well with the U.S. Department of Justice , which takes a dim view of anything less than full disclosure in anti-corruption probes. Given the damage that ISIS inflicted on Western interests, including significant civilian and military casualties, it will also go down badly with the general public.
It’s possible that approximates the size of the DOJ penalty. The $37 billion company’s 2019 settlement over graft in China, Vietnam, Indonesia, Kuwait and Djibouti made clear that the hefty size of the fine was partly due to Ericsson’s foot-dragging. Keeping any Iraqi skulduggery under wraps while in negotiations with the Feds is a distinctly bad look.Yet the market reaction may also reflect the potential impact on Ericsson’s strategy.
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