Swedish telco Ericsson is set to face further regulatory scrutiny over bribery allegations, following an announcement from the US Securities and Exchanges Commission (SEC) that it will open an investigation into suspected bribery payments in 2019.
The investigation is based on Ericsson’s own report into its business in Iraq, which revealed that some payments may have been made to militant groups such as Islamic State in Iraq.
The report, which was only made public thanks to a campaign by Sweden’s International Consortium of Investigative Journalists, followed a $1bn settlement made with the US Department of Justice (DoJ) in 2019 over another bribery case concerning Ericsson’s activity in Djibouti, China, Vietnam, Indonesia and Kuwait.
The DoJ is investigating whether the terms of the settlement, which included the appointment of an independent compliance monitor for three years, have been breached by Ericsson and the revelations over its activity in Iraq.
Now the SEC is joining the US investigation. While the DoJ is concerned with any criminal aspects involved, the SEC investigation will centre on the civil aspects.
Ericsson has stated that it is “fully cooperating” with the SEC but added that it was too early to either determine or predict the outcome of the investigation.
The telecoms giant is also facing a bribery investigation in Sweden based on the revelations about payments to terrorist groups in Iraq.
News of the SEC probe saw Ericsson’s share price fall by 2.5% as of 10 June as a result of fears that the combined fine will exceed the previous $1bn settlement.
Capital markets analyst Jeffries stated: “We believe the combined penalty to be paid in this round of investigations is likely to be somewhat higher than the previous one, in light of the repetitive misconduct, the breach of the DPA and the corruption being in Iraq.”
The company has seen its stock fall in value by a third since February.