Ericsson stands by tax charge employees

Six employees at Swedish telecoms giant Ericsson have been charged with evasion of tax control by Swedish prosecutors.

The charges revolve around the system Ericsson used to make payments to commercial agents. The Swedish Economic Crimes Bureau says Ericsson had entered false invoices in its books in order to hide other payments.

The prosecutor says that Ericsson used service companies, which would invoice the company for marketing consultancy services. In fact, says the prosecutor, the money paid by Ericsson went to foreign bank accounts used by Ericsson to pay commercial agents. Many of the invoices were written by Ericsson’s own employees.

The money paid into the foreign accounts was then forwarded to the intended recipient, with the companies that sent the invoices only taking a commission. The payments out of these companies were not entered in the books, according to investigators. Over 3 billion kronor was paid by the company using these methods in 1998 and 1999.

Ericsson is standing by its employees, saying that none of them are guilty of the offence.

“The fact that charges have been laid is not in itself a reason to reassess the confidence we have in those accused individuals who remain employees of Ericsson,” said CEO Carl-Henric Svanberg.

The company says that although the system it used to pay commercial agents was “flawed”, it claims that it is clear that the company never intended to evade tax control or taxes. It adds that the company no longer uses the system at the centre of the case.

In a press release, Ericsson acknowledges that the allegations are damaging for the company. The company adds that it has filed a criminal complaint against a former employee in Switzerland for misappropriation of funds.