Ericsson probed by US over alleged corruption in China

US authorities are investigating Swedish telecoms giant Ericsson over claims of corruption in its Chinese operations, the Svenska Dagbladet newspaper reported late on Thursday.

Ericsson probed by US over alleged corruption in China
Photo: Jonas Ekströmer / TT

Ericsson confirmed in a statement Friday that US officials had “a number of questions” relating to its activities without giving further details.

“We will not provide any detailed comments on the request as such, but can say that it relates to Ericsson's anti-corruption programme and questions related to the Foreign Corrupt Practices Act,” said the company. “Ericsson cooperates with US Authorities and works diligently to answer the questions.”

The Swedish newspaper, which cited “several sources, independent of each other”, said that the probe was being led by the US financial regulator, the SEC, with assistance from the US Department of Justice.

“A senior manager at Ericsson alerted the chief executive at the time, Carl-Henric Svanberg, to interests that Mats H. Olsson (a recently fired manager in Ericsson's Asian business) had in an Ericsson subcontractor,” said the paper.

“The subcontractor had in fact obtained a monopoly to supply Ericsson in China.”

The paper claims to have seen a document that proves that management at the time had “resolved the issue by offering the whistleblower early retirement while leaving Mats H. Olsson in post”.

Current Ericsson chief executive Hans Vestberg, at the company since 1988, was head of the company's global services unit in 2006.

The scandal has prompted one major investor, Sweden's Nordea bank, to publicly criticize Ericsson.

“If irregularities are discovered it will cost a lot of money. It's not good for our shareholders or our customers,” said Nordea's head of responsible investment, Sasja Beslik. “As a shareholder we have not been informed about the SEC investigation, which has an effect on the value of the company. These are things that should have been better managed.”

Ericsson said that it has kept the market updated. “As a listed company, we always follow the requirements to publicly disclose any information about events that would have a material impact on the company or its finances. Should such materiality arise, Ericsson will disclose information in accordance with regulatory requirements,” said the company in its statement.


Ericsson suspends all Russia operations indefinitely

Swedish network equipment maker Ericsson said Monday that it was suspending all of its Russian operations over the war in Ukraine for the foreseeable future.

Ericsson suspends all Russia operations indefinitely

The telecom giant already announced in late February that it would stop all deliveries to Russia following Moscow’s February 24 invasion of Ukraine.

“In the light of recent events and of European Union sanctions, the company will now suspend its affected business with customers in Russia indefinitely,” Ericsson said in a statement.

The company added that it was “engaging with customers and partners regarding the indefinite suspension of the affected business.”

“The priority is to focus on the safety and well-being of Ericsson employees in Russia and they will be placed on paid leave,” it said.

READ ALSO: How has Sweden responded to Putin’s war in Ukraine so far?

Hundreds of Western firms ranging from Ikea to Coca-Cola, Goldman Sachs and McDonald’s have stopped operations in the country since the invasion, with French banking group Societe Generale announcing Monday it was selling its stake in Russia’s Rosbank.

Ericsson has around 600 employees in Russia, and is a “major supplier to the largest operator MTS and the fourth largest operator Tele2,” a company spokeswoman told AFP, adding that together with Ukraine, Russia accounts for less than two percent of revenue.

As a result, the equipment maker said it would record a provision for 900 million Swedish kronor ($95 million, 87 million euros) for the first quarter of 2022 for “impairment of assets and other exceptional costs,” though no staff redundancy costs were included.
Ericsson is due to publish its first quarter earnings on April 14.