Asharq Al-awsat English Middle-east and International News and Opinion from Asharq Al-awsat Newspaper

Ericsson Warns of Possible Fine Over Payments to ISIS in Iraq

Ericsson Warns of Possible Fine Over Payments to ISIS in Iraq

Thursday, 14 April, 2022 - 05:45
Ericsson headquarters in Stockholm. (Fredrik Sandberg/TT News Agency/AFP/Getty Images)

Sweden's Ericsson, under fire for its handling of a bribery investigation in Iraq, warned on Thursday of a potential fine by US regulators and reported a fall in first-quarter core earnings over its suspension of business in Russia.

Last week, investors publicly rebuked Chief Executive Borje Ekholm and the board over the handling of the scandal that could expose the firm to yet another fine by the US Department of Justice (DOJ).

"The resolution of these matters could result in a range of actions by DOJ, and may likely include additional monetary payments," Ekholm said in a statement, adding that it could not reliably estimate the size of the fine.

The Swedish company's shares have fallen in the last two months after disclosure of an internal report about potential payments to ISIS in Iraq, Reuters reported.

The company avoided adding clarity on the misconduct and failure to properly inform the US authorities, saying it’s “fully committed” to co-operating with the DOJ. The magnitude of any additional payments “cannot at this time be reliably estimated.”

“We remain limited in what we can say about the historical events covered in the Iraq investigation and our ongoing engagement on the matter,” the company said, citing the ongoing probe.

Ericsson’s uarterly adjusted operating earnings fell to 4.7 billion Swedish crowns ($497.44 million) from 5.3 billion a year ago.

The mean forecast of 6.63 billion does not reflect a provision of 0.9 billion crowns related to Russia that was announced this week, according to Refinitiv data.

However, the company's total quarterly revenue rose 11% to 55.1 billion crowns, beating estimates of 53.36 billion crowns.

On Monday, Ericsson said it was indefinitely suspending its business in Russia over the invasion of Ukraine, with a $95-million provision in the first quarter for impairment of assets and other exceptional costs.

It also said a 1-billion-crown annual software contract normally recorded in the first quarter was delayed into the next quarter.

Excluding the provision and other charges, Ericsson's core earnings amounted to 5.9 billion crowns.

Editor Picks