With the details of 5g communication equipment giant Ericsson’s payment of “road tolls” to terrorists constantly exposed, the statement of the U.S. Department of justice made the company’s share price hit again on Wednesday.
As of press time, Ericsson’s share price fell more than 12% on the Stockholm stock exchange in Sweden on Wednesday. Since the incident on February 15, the company’s share price has fallen by 35%. Ericsson’s US stocks also fell nearly 13% before trading on Wednesday.
The context of the whole incident is not complicated. During the investigation of Ericsson’s “ten million US dollars” and the Contractor’s “ten million US dollars” against the company’s internal business code, there was a series of serious problems in 2019. Among them, the problem of “road purchase fee” caused an uproar is that the company has paid road purchase fees to areas controlled by terrorists such as the Islamic state (ISIS), so as to bypass the Iraqi customs to transport communication equipment.
Ericsson signed a deferred prosecution agreement (DPA) with the U.S. Department of justice in December 2019 and spent $1 billion to settle a series of transnational corruption investigations. Therefore, when the incident occurred in mid February, the mainstream view of analysts was that the incident might have an impact on the company’s reputation and market confidence, and it was unlikely to trigger a new round of regulatory investigation.
But the latest statement from the US Department of justice overturned this view.
According to the announcement disclosed by Ericsson on Wednesday, the U.S. Department of justice informed the company on March 1 that the disclosure of their internal investigation on the Iraq issue before signing the DPA was not sufficient. At the same time, the Department determined that Ericsson did not disclose the situation after completing the investigation, which constituted a violation of the DPA.
(source: Ericsson official website)
Ericsson said it was in continuous communication with the US Department of justice on the relevant situation and would cooperate with the Department to solve the problem. At this stage, it is impossible to predict the possible results of relevant problems.
According to the media report based on the “Ericsson internal report” in recent days, it is mentioned that at least 10 employees of the company have violated the company’s guidelines, involving bribery, fraud, money laundering, obstruction of investigation, etc. Some employees were dismissed, but at least one was promoted.
Similarly, the report also showed that the company confirmed that at least 30 trucks loaded with Ericsson equipment were allowed to pass through the area controlled by the “Islamic state” at the price of US $3 Xj Electric Co.Ltd(000400) 0 each, in order to bypass the checkpoints set up by Iraqi customs.
In the latest statement, Ericsson also stressed again that the investigation did not find any Ericsson employees involved in directly financing terrorists. After evaluating the media reports, the company believes that this conclusion has not changed.
