According to the Ericsson List report by the International Consortium of Investigative Journalists (ICIJ), which has been widely reported in the international mainstream media such as the Washington Post, Financial Times, El Pais and Aljazeera, the telecom giant Ericsson made tens of millions of dollars worth of suspicious payments in Iraq, financing slush funds, trips abroad for defence officials and pay-offs to local corporate executives, and to gain access for transport through areas under the control of the Islamic State (ISIS).
These were revealed by an internal investigation obtained by the ICIJ and shared with global media partners.
Ericsson’s share price tumbled by more than 7% in opening trade on Wednesday on the Stockholm stock exchange after the news went online.
A financier of ISIS
The investigation of the Swedish telecom giant revealed that the company had almost become a financier of ISIS in Iraq. The claims are that Ericsson had bribed ISIS after the seizure of Mosul by the jihadist group in 2014.
Some employees of Ericsson subcontractors had been taken hostage during this period.
Ericsson CEO Börje Ekholm made an announcement about the claims, and accepted that they had paid bribes to ISIS. Ekholm said that the reason was to facilitate transportation in Iraq.
According to the ICIJ report, one of the engineers working for the company and employed by a subcontractor was sent to ISIS to negotiate.
However the young engineer named Affan was taken hostage and 2.4 million dollars was demanded as a ransom.
The report also indicates that some other Ericsson officials were also taken hostage alongside Affan, only to be released some time later. The conditions enabling their release still remain a mystery.
Passage through ISIS checkpoints
The ICIJ report includes a list of 20 shipments in 2016 and 2017 from Ericsson’s warehouse in northern Iraq to locations that would have been almost impossible to reach without passing through ISIS checkpoints, where militants routinely demanded payments.
Ericsson seems to have continued with its operations in Iraq which, at that time had began boosting up the mobile telecommunication infrastructure that apparently presented a promising market regarding finance for ISIS.
The report indicates that ‘it cannot be excluded’ that Ericsson had indirectly contributed to ‘the illicit financing of terrorism.’
Suspicious payments in Iraqi Kurdistan
According to the ICIJ report, another suspicious payment is involving one of the ruling families in the Kurdistan region of Iraq.
In 2014, Ericsson managers approved a request for $50,000 in cash from Sirwan Barzani, who was then both chairman of Korek, a cellphone company and Ericsson client, as well as ‘de facto head of the Kurdish forces,’ the investigation said.
Barzani had asked that the money be given to a charity he controlled that claimed to provide shelter and medicine to displaced Iraqis. But Ericsson investigators uncovered an array of suspicious details, including a supposed receipt for a gift that came from an entity and which appeared to have a forged signature.
Barzani is reported as not having responded to questions about the payment or other aspects of Korek’s business with Ericsson.
The report mentions that e-mails showed that the payment was cleared by Rafiah Ibrahim, a Malaysian-born executive then in charge of Ericsson’s business across the Middle East and Africa. Approving the expense, she wrote that the donation should be used to ‘try to get mileage from Korek.’
Ibrahim, who also is reported as not having responded to requests for comment, was promoted by Ekholm to a senior executive team in 2017, but left the management ranks in 2019 in the midst of the Iraq investigation. She continues to be listed online as an adviser to Ekholm.
The company changes attitude
In fact it is apparent that for more than two years, Ericsson executives were aware of the wide-ranging problems investigators had uncovered in Iraq but did not provide information to investors or the public.
The company’s stance changed earlier this month after it received detailed questions about the Iraq investigation from ICIJ and its media partners. Within days, Ericsson issued a news release summarising the findings of its internal investigation.
