Shareholders prepare to turn back on Ericsson chief amid supposed Isis payments
Some of Ericsson’s biggest investors have said they would vote against clearing some of its board members of responsibility over the possible payment of bribes to militant groups in Iraq, such as the Islamic State.
Cevian Capital and Norway’s sovereign wealth fund have revealed their plans to vote against the motion due tomorrow at the telecom gear maker’s shareholder’s meeting.
Norway’s $1.3 trillion sovereign wealth fund said in a statement: “When voting on a proposal to discharge the board of responsibilities, we will consider whether any information raises reasonable doubt about the board’s actions”.
According to fund data, it had a 1.45 per cent stake in Ericsson worth an estimated $532m at the end of 2021.
Meanwhile, Cevian’s co-founder Christer Gardell told the Financial Times earlier this month: “There’s a complete lack of trust in Ericsson’s corporate governance. It needs to be re-established”.
If shareholders do not discharge liability, this is likely to put greater pressure on the board to rethink its management structure.
More than $5bn (£3.8bn) was wiped from Ericsson’s market value following its explosive admission that it may have made payments to Islamic State (ISIS) based on “unusual expense claims in Iraq” dating back to 2018.
In a lengthy statement on the website, it said that during an internal investigation it identified payments made to intermediaries, as well as the use of alternate transport routes in connection with “circumventing Iraqi Customs at a time when terrorist organizations, including ISIS, controlled some transport routes”.
Some of these activities include employees making donations without a clear beneficiary and paying suppliers without proof of documents.
Last week Ericsson chairman Ronnie Leten revealed that a comprehensive review was underway following the company’s potential payments to the Islamic State in Iraq.
Belgian businessman Ronnie Leten said that the review was being headed by the company’s newly appointed chief legal officer, Scott Dresser.
The Ericsson chairman also stated that the company’s chief executive Borje Ekholm had the board’s full confidence, despite recommendations that shareholders should oust him Today’s reports suggest this may not be as certain as once thought.
Ericsson is a notably key player in the rollout of 5G networks in the UK, having replaced Chinese telecoms firm Huawei after security concerns.
Ericsson were unable to provide City A.M. with any additional comment.