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technologyJanuary 13, 2023

Ericsson books $220 million for US fines on Iraq claims

Ericsson said Thursday it had earmarked $220 million to cover potential U.S. fines over suspected bribes to the Islamic State group in Iraq, a case that has weighed over the Swedish telecoms group for months.

The company acknowledged in February that some employees may have bribed IS members for road transport through areas controlled by the jihadists in Iraq between 2011 and 2019.

The U.S. Department of Justice is investigating if Ericsson violated its Foreign Corrupt Practices Act (FCPA), which can be applied to foreign firms that file regulatory reports in the United States.

'Ericsson has not reached a resolution with the DOJ regarding these alleged breaches and discussions are ongoing,' a company statement said.

It had already agreed in 2019 to pay $1 billion in penalties to US authorities to close corruption cases in Djibouti, China, Vietnam, Indonesia and Kuwait.

The provision for the latest potential US fine, of 2.3 billion kronor, will be booked in the company's fourth-quarter 2022 financial results.

Investors appeared relieved, with Ericsson shares climbing around six percent on the Stockholm stock exchange to 67.66 kronor.

The alleged Iraq bribes were revealed by the International Consortium of Investigative Journalists (ICIJ), based on an internal Ericsson investigation from 2019 that was never made public.

Swedish prosecutors have also opened an inquiry into the alleged IS payments, which CEO Broje Ekholm has called 'serious breaches of compliance rules and the company's code of business ethics.'