Ericsson’s decade of bribery and corruption in Iraq laid bare

• Author: ICIJ
• Published date: 28 February 2022
• Publication title: Irish Times (Dublin, Ireland)

The report reveals that the Swedish-based firm made tens of millions of dollars in suspicious payments over nearly a decade to sustain its business in Iraq, financing slush funds, trips abroad for defence officials and payoffs through middlemen to corporate executives and possibly terrorists

The internal investigation describes a pattern of bribery and corruption so widespread, and company oversight so weak, that millions of dollars in payments couldn't be accounted for - all while Ericsson worked to maintain and expand vital cellular networks in one of the most corrupt countries in the world. The review, which has not been made public, covers the years 2011-2019.

Ericsson's business in Iraq relied on politically connected fixers and unvetted subcontractors. It was marked by sham contracts, inflated invoices, falsified financial statements and payments to "consultants" with nebulous job descriptions. In one instance a member of a powerful Kurdish family, the Barzanis, collected $1.2 million (€1.06 million) for "facilitation to the chairman" of a mobile phone operator - also a Barzani, the report says.

Most of the corrupt conduct came after Ericsson, a key actor in the West's battle with China over the future of global communications, acknowledged in 2013 that it was cooperating with US authorities investigating bribery allegations elsewhere.

The US investigation, which does not mention Iraq, resulted in a $1 billion bribery settlement in 2019 with the US Department of Justice and the Securities and Exchange Commission.

The International Consortium of Investigative Journalists (ICIJ) shared the leaked records with the Washington Post, SVT in Sweden and 28 other media partners in 22 countries as part of a project known as the Ericsson List. ICIJ and its partners verified the records' authenticity and spent months examining other documents and interviewing ex-employees, government officials, contractors and other industry insiders in Iraq, London, Washington, Jordan, Lebanon and elsewhere.

The leaked documents include 73 pages of a 79-page report on Ericsson's Iraq business, including summaries of 28 witness interviews and 22.5 million emails.

ICIJ and partnering news organisations sent detailed questions to Ericsson about the secret internal review. Instead of answering, Ericsson issued a public statement on February 15th acknowledging "corruption-related misconduct" in Iraq and possible payments to Isis.

Ericsson chief executive Börje Ekholm granted interviews to news outlets not in possession of the leaked documents. He said that Ericsson may have made illicit payments but that the company had often struggled to identify the final beneficiary.

"We can't determine where money sometimes really goes, but we can see that it has disappeared," Ekholm told a Swedish newspaper.

Ericsson cited its "commitment to transparency" in its recent disclosures. But the company made no mention of other internal investigations described in the leaked documents.

The records show that besides Iraq, the company examined alleged misconduct in Lebanon, Spain, Portugal and Egypt. In addition, a spreadsheet lists company investigations into possible bribery, money laundering and embezzlement by employees in Angola, Azerbaijan, Bahrain, Brazil, China, Croatia, Libya, Morocco, the United States and South Africa. These investigations have not been previously disclosed.

A 2014 decision stands as pivotal for Ericsson. As Isis conquered towns, pillaged homes and beheaded hostages, two employees proposed halting operations in Mosul and elsewhere in Iraq. Senior regional executives rejected the recommendation. Leaving would "destroy our business", the report quotes the executives as saying.

Less than a month later Ericsson asked a regional partner, Asiacell Communications, to seek "permission from 'local authority Isis'" to continue work in Mosul. This led to gun-toting Isis fighters kidnapping a crew chief with an Ericsson subcontractor, according to the report and the kidnap victim. Asiacell did not respond to repeated requests for comment.

Ericsson's investigators said they could not rule out the possibility that the company financed terrorism through its subcontractors, though they couldn't identify any Ericsson employee as "directly involved".

Ericsson's compliance department, which monitors the transnational company's activities, prepared the confidential records with the help of Simpson Thacher & Bartlett, a high-powered New York law firm, which handled its defence in the US bribery investigation.

The internal review, while damning, often fails to reach specific conclusions and suggests an incomplete investigation into some of the most explosive allegations, including that payments were made to terrorists. Internal investigators did not interview officials of the main transport firm moving Ericsson equipment through Isis territory or the subcontractors the company relied on to work in Isis-held Mosul, for example.

Questions from ICIJ and its partners that Ericsson has refused to address include why a regional executive was promoted during the corruption investigation and why workers' lives were put at risk by company operations in Iraq.

It is not clear how much the US justice department and Securities and Exchange Commission (SEC) knew about abuses in Iraq or whether Ericsson fully disclosed its internal findings to the agencies. The justice department and SEC declined to comment on...