ericsson is going through various problems that have led to its CEO, Borje Ekholmto make the decision of leave Alibaba’s board of directors to focus on fixing them and correct the course of the company. Ekholm himself has acknowledged this in the statement in which he announces his resignation from the position of independent director of Alibaba, which he has held for the past seven years. It goes “to spend more time on Ericsson business«. And he needs it especially after news broke that several Ericsson employees may have indirectly paid to ISIS in 2018 to run network equipment through checkpoints land in areas controlled by terrorists in Iraq.
Ekholm, who leaves the post at Alibaba on March 31, has already admitted that an investigation of these events has «identified evidence of conduct related to corruption«, which obviously has not been well received by the company’s shareholders and has caused the value of its shares to drop by 12%.
The investigation has been carried out among Ericsson employees, suppliers and vendors between 2011 and 2019 in Iraq, and has revealed, among others, the following fraudulent behavior: making a donation without a clear beneficiary, paying a supplier for a job without a defined scope and documentation, using suppliers to make cash payments, financing improper expenses and travel, improper use of sales agents and consultants, violations of the company’s internal financial controls, conflicts of interest, noncompliance with tax laws, and obstruction of the investigation.
In addition, the investigators identified payments to intermediaries and the use of alternative transportation routes to bypass Iraqi customs during a period when various terrorist organizations, including Da’esh, controlled some transportation routes. Of course, the investigators have not been able to specify who received these payments. In addition, the company has stressed that no Ericsson employee had been identified as being directly involved in the financing of terrorist organisations. Of course, as a result of the investigation, several employees have been fired and disciplinary measures have been taken, as well as others aimed at avoiding this type of event.
But it is not the only problem that Ekholm has to face. According to The Register, the company also has to address a significant drop in revenue in China, after Sweden, Ericsson’s home country, banned China’s Huawei from telecommunications in the country. It is also processing the purchase of Vonage, for which the company paid $6.2 billion as part of a “strategy to expand its presence in wireless in the company and to expand its global offer«, and already thinks about more purchases of companies in that sense.
As if this were not enough, Ericsson has been investigated by the Department of Justice and the United States Securities and Exchange Commission in response to allegations of bribery in other countries. The company he has hired some days ago a new Legal Officer to deal with what you have defined as a “surveillance agreement and suspension of legal actions» signed with the US authorities. Likewise, the board of directors of Ericsson has also assured investors that it is dealing with all this accumulation of problems and setbacks.