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Ericsson Sued by Investor Over Disclosure of Possible ISIS Bribe

March 4, 2022, 5:36 PM

Ericsson and its Chief Executive Officer Borje Ekholm were accused in a U.S. lawsuit of misleading investors about the company’s role in bribes allegedly paid to a terrorist organization ISIS to win business in Iraq.

The suit, which also names Chief Financial Officer Carl Mellander, was filed by investor David Nyy in New York federal court on Thursday and seeks class-action status. Nyy claims actions by the telecommunications company violated U.S. securities laws and resulted in “significant losses and damage” to investors.

Ericsson, which paid more than $1 billion in 2019 to avoid U.S. prosecution in a long-running corruption probe, revealed last month that an internal investigation showed its possible involvement in the payments to ISIS. That disclosure, along with subsequent developments, sent company shares down by about a third.

The U.S. Department of Justice has since accused Ericsson of violating its deferred prosecution agreement and says the company failed to make adequate disclosures about its operations in Iraq before entering into the 2019 agreement.

A report last week from the International Consortium of Investigative Journalists detailed allegations about Ericsson’s practices in Iraq, which included the claim about payments to ISIS.

Stockholm-based Ericsson said in a statement Friday it learned of the U.S. legal action after its the annual report was finalized Thursday. A company spokeswoman declined further comment.

To view the source of this information click here.

The case is David Nyy v. Telefonaktiebolaget LM Ericsson, 22-cv-01167, U.S. District Court, Eastern District of New York (Brooklyn)

To contact the reporters on this story:
Thomas Seal in London at tseal@bloomberg.net;
Jennifer Ryan in London at jryan13@bloomberg.net

To contact the editors responsible for this story:
Giles Turner at gturner35@bloomberg.net

Steve Stroth

© 2022 Bloomberg L.P. All rights reserved. Used with permission.