Ericsson’s internal report on Iraq bribery ‘insufficient’: US DoJ

Swedish telecoms company Ericsson said on Wednesday that US authorities have found its disclosures about an internal inquiry into its conduct in Iraq, including suspected bribes to the Islamic State group, "insufficient".

Ericsson's internal report on Iraq bribery 'insufficient': US DoJ
File photo of Ericsson's CEO Börje Ekholm. Photo: Jessica Gow/TT

The news from the telecom company sent shares tumbling more than 10 percent as the Stockholm stock exchange opened.

The company’s value had already taken a beating in recent weeks over the anticipated publication of a media investigation coordinated by the International Consortium of Investigative Journalists (ICIJ).

It revealed an internal Ericsson 2019 investigation that was never made public, identifying possible corruption over many years in the group’s Iraqi operations, including links to Islamic State.

The revelations were published in the media on Sunday, but Ericsson had previously released statements addressing the claims.

Ericsson had already paid one billion dollars to the US Department of Justice to close a case of corruption in five countries, as part of a “deferred prosecution agreement” (DPA).

The Stockholm-based company revealed last month that it had already handed over its internal investigation on Iraq to US authorities.

But the Department of Justice (DoJ) informed Ericsson on Tuesday “The disclosure made by the company prior to the DPA about its internal investigation into conduct in Iraq in the period 2011 until 2019 was insufficient,” the telecom giant said in a statement.

In addition, the DoJ determined the company had “breached the DPA” by failing to make further disclosures related to the investigation after the agreement was reached.

Ericsson said it was “in communication with the DoJ” about the case and looking to resolve the issue.

“At this stage it is premature to predict the outcome of this matter,” the company said.

Since the revelations first came to light, Ericsson shares have lost nearly a third of their value.

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Philip Morris offers $16 bn for Swedish smokeless tobacco firm

Marlboro-maker Philip Morris International said on Wednesday that it had offered $16 billion to acquire smokeless tobacco company Swedish Match as the US group aims to move away from its traditional cigarette business.

Philip Morris offers $16 bn for Swedish smokeless tobacco firm

The board of Swedish Match recommended that its shareholders accept the bid of 106 Swedish kronor per share, nearly 40 percent above its closing share price on Monday, the companies said in separate statements.

The deal would total 161.2 billion Swedish kronor (15 billion euros).

Stockholm-based Swedish Match derives more than 65 percent of its revenue from smoke-free products, including chewing tobacco and the Zyn brand of nicotine pouches.

Philip Morris announced in 2016 a long-term goal to stop selling cigarettes and replace them with alternatives that it says are less harmful.

The US company sells cigarette brands such as Marlboro and Chesterfield in 180 markets outside the United States and has invested billions of dollars since 2008 in vapor products, oral nicotine and other “reduced-risk” products.

Last year it clinched a controversial takeover of British breathing inhaler manufacturer Vectura, despite fierce opposition from health campaigners and medical groups.

The group plans to generate at least $1 billion in annual net revenues from nicotine-free products by 2025.

Philip Morris and Swedish Match had confirmed the takeover talks on Monday following a Wall Street Journal report.

“We are pleased to announce this exciting next step in Philip Morris International’s and Swedish Match’s trajectory toward a smoke-free future,” the US company’s chief executive, Jacek Olczak, said in a statement.

“Underpinned by compelling strategic and financial rationale, this combination would create a global smoke-free champion — strengthened by complementary geographic footprints, commercial capabilities and product portfolios — and open up significant platforms for growth in the US and internationally,” he said.

Swedish Match chairman Conny Karlsson told AFP that the deal was a “good offer” for shareholders.

“It’s great to have the chance to broaden the distribution of our products, which can compete with cigarettes,” Karlsson said.

Snus scandal

Swedish Match is also known for making cigars and “snus”, a form of snuff particular to Nordic countries.

The sale of snus, a moist powder tobacco originating from dry snuff, is illegal across the European Union, but Sweden has an exemption. It contains nicotine and comes in teabag-like pouches that are placed under the lip.

In 2012, Swedish Match said an associate to the EU’s then health commissioner had sought a 60-million-euro payment from the company to push for a proposed tobacco law that would lift the snus ban.

The firm filed a complaint with the European Anti-Fraud Office and the health commissioner, John Dalli, resigned from his post.

Dalli appeared in a Maltese court this year on charges of bribery and trading in influence over the lobbying scandal.

Swedish Match shares rose by almost nine percent to 103.50 kroner following the takeover bid.

Philip Morris, listed on the New York Stock Exchange, was up 0.6 percent to $99.47 in electronic trading before the stock market opened.