(Bloomberg) — Ericsson’s governance woes continued to pile up after the US Securities and Exchange Commission started a probe into the company’s handling of a corruption scandal in Iraq.
The SEC “has opened an investigation concerning the matters described in the company’s 2019 Iraq investigation report,” Ericsson said in a statement after market close on Thursday. The company added that it’s “fully cooperating” and that “it is too early to determine or predict the outcome.”
The Swedish maker of 5G mobile networks has been in the eye of the storm over its mishandling of operations in Iraq ever since a fresh round of allegations emerged in Swedish media in February. The company admitted it may have paid the ISIS terror organization to gain access to transport routes in a scandal that goes as far back as 2011.
Ericsson’s share price opened 2.5% down when trading started in Stockholm on Friday morning. Analysts at Svenska Handelsbanken said the company could face fines in the range of $100 million to $300 million when the US investigations are resolved. News of the SEC probe “is obviously negative for the share, but should come as no major surprise to the market,” Daniel Djurberg said in emailed comments.
Read Our Street Wrap: Ericsson SEC Investigation Expected, Priced In
This year’s revelations have a prompted a series of new probes from authorities in both the US and Sweden. The US Department of Justice in March said that Ericsson had failed to make adequate disclosures about its operations in Iraq before entering a deferred prosecution agreement in 2019. In its home market, the company is facing a preliminary investigation by the Prosecution Authority into suspected bribery.
At the company’s recent annual general meeting, shareholders voted against discharging Chief Executive Officer Borje Ekholm from legal liability.
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