A few days ago a possible Ericsson corruption scandal in Iraqof such magnitude that it has made its CEO leaves Alibaba’s board to focus on problems of the company. It appears that several Ericsson workers may have indirectly paid ISIS in 2018 to facilitate the passage of various network equipment through ground checkpoints in Iraqi terrorist-controlled areas. and heThe management of this scandal does not seem to have pleased its shareholders at allwho are preparing to vote in the next few hours on this issue.
Apparently, the company’s shareholders are furious because they did not receive enough information until February from the company in relation to the investigation of the scandal, whose coming to light has caused the value of Ericsson’s shares, opened in 2019. Furthermore, when the company forwarded the information to them, after the media began asking questions about it, its shares had already lost more than a quarter of their value. Everything makes the probability that they make their anger clear with their vote is very high.
Among other things, in this vote the shareholders will decide whether the CEO of the company, Börje Ekholm, as well as other of his directors, can be held personally responsible for the decisions they have taken in this regard so far. And under the laws of Sweden, Ericsson’s home country, if shareholders who own at least 10% of a company’s shares do not hold its board members harmless for decisions made by them during the previous year , the company and its investors can sue them.
According to Reuters, the votes of the shareholders in relation to this scandal are going to exceed the threshold of 10%, which means that both Ekholm and other members of Ericsson’s management are going to have to deal with several problems. For starters, while losing the vote doesn’t mean Ekholm has to resign immediately, it does mean he’ll have more hurdles to turn the company around.
Ekholm hasn’t been at the helm of Ericsson for long. He arrived in 2016 from the company’s main shareholder, Investor AB, after a season in which Ericsson had very poor results and faced an investigation by the United States authorities after several accusations of bribery in various countries. Ekholm paid $1 billion to the Justice Department after negotiating a settlement, and managed to reinvigorate it. But not a year had passed and the company already had to face the results of the investigation, and although Ekholm has been betting on transparency and encouraging employees to report wrongdoing, the company decided not to communicate the details of the new investigation to shareholders.
According to Ekholm, the discoveries made did not pass the minimum percentage of approval necessary in the voting to make them public. But it later emerged that even the US Justice Department did not know the full details of the investigation. Supposedly, it should have been, as agreed between the parties in 2019.
In this regard, Ekholm confirmed a few days ago that he had instructed his team to report the investigation to the authorities. But in the end it was not done, and at the beginning of the month Ericsson changed its Legal Manager. He dispensed with the services of Xavier Dedullen, who took over the management of the deal in 2019.