Ericsson sets aside £183m to settle ISIS corruption scandal

Funds will pay any US Department of Justice costs

Ericsson is preparing to write off £183 million to resolve its case with the U.S. Department of Justice regarding allegations that it paid millions of dollars to ISIS to continue its operations in Iraq. The £183 million (£2,3bn Kroner) provision will be provisioned in Ericsson’s fourth quarter 2022 financial results.

In October 2021 and March 2022, the Department of Justice notified Ericsson that it failed to report to the DOJ certain information relating to a 2019 Iraq-related internal investigation. The DOJ has not alleged or charged Ericsson with any new criminal misconduct.

American families of servicemen and workers killed or injured in Iraq, Afghanistan and Syria are suing Ericsson under the federal anti-terrorism act.

The families last year filed a suit in the District Court of Columbia alleging that Ericsson bribed terrorist groups to protect its interests in these countries and by doing so exposed their family members to graver risks.

It is alleged Ericsson personnel in Iraq bribed ISIS to work in an ISIS-controlled city and paid to smuggle equipment into ISIS areas on an unofficial route known as the “Speedway,” according to an internal investigation report leaked to the International Consortium of Investigative Journalists.

“The Company believes that this is a sufficiently reliable estimate of the financial penalty associated with any potential breach resolution, and this provision also includes estimated expenses for the previously announced extended monitorship. The provision will be booked as Other Operating Expenses in the income statement of Segment Other” said a press statement.

“The internal investigation and its cooperation with authorities in relation to the allegations in the 2019 Iraq-related internal investigation report remain open and ongoing”

Ericsson says it has taken director-supervised steps over the last three years measures to improve its approach to risk management, compliance, and internal controls.

“The Company agreed in December 2022 to extend its independent compliance monitorship until June 2024 to further our efforts to embed best-in-class compliance, risk management and internal controls frameworks across the organisation”.