The US Securities and Exchange Commission (SEC) has opened an investigation into Swedish telecoms equipment giant Ericsson.
The company confirmed the development, and said it is “cooperating fully with the Securities and Exchange Commission,” on the matter.
It was in December 2019 when the US Department of Justice said Ericsson had agreed to pay more than $1 billion (£760m) to settle an investigation into allegations of corruption including bribery of government officials.
increase the fine?
At the time, the agency said, “the company has admitted to a years-long campaign of corruption in five countries to consolidate its grip on the telecommunications business.”
The Justice Department said at the time that Ericsson’s corrupt activities spanned from 2000 to at least 2016 in countries including Djibouti, China, Vietnam, Indonesia and Kuwait.
The settlement, believed to be one of the highest ever under the US Foreign Corrupt Practices Act (FCPA), includes a $520 million criminal penalty to the Department of Justice and a $540 million payment to the Securities and Exchange Commission (SEC).
But the Securities and Exchange Commission has now launched a separate investigation into the company’s handling of misconduct in Iraq.
News of this development sent Ericsson shares down 2.4 percent on Friday, due to investor fears of an increased SEC fine.
The Department of Justice (DoJ) has already launched its own investigation into the matter.
The Swedish company said on Thursday: “As previously announced, Ericsson has contacted the authorities regarding a review and investigation of the company’s conduct in Iraq.” The US Securities and Exchange Commission (SEC) has notified the Company that it has opened an investigation regarding the matters described in the Company’s 2019 Iraq Investigation Report.
“It is too early to determine or predict the outcome of the investigation, but Ericsson is cooperating fully with the SEC,” she said.
The controversy, which broke out in February this year, relates to an investigation conducted by Ericsson in 2019. This investigation found payments made to the Islamic State in Iraq.
But while this misconduct did not occur under the current administration, Ericsson did not fully share the report with the Department of Justice, which prompted its investigation.
Outraged investors voted against absolving board members of liability for 2021. Board members can be held personally liable for their actions.
There is concern that the investigation could derail Ericsson’s $6.2 billion deal to buy US cloud communications company Vonage.