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Ericsson report details how it paid off Islamic State

Staff sacked after bosses discovered terrorists received money for access to Iraq mobile market

A leaked internal report details how Ericsson paid hundreds of millions of pounds to Islamic State terrorists in Iraq, substantiating earlier reports that the company was paying intermediaries to buy off ISIS on its behalf.

The International Consortium of Investigative Journalists (ICIJ) revealed over the weekend that the leaked report, which reviews the years 2011 to 2019, included names and precise details of how money from the company found its way to terrorists.

Rather than halting operations in Iraq as Islamic State ravaged the country, some personnel within Ericsson instead bribed "politically connected fixers and unvetted subcontractors", the ICIJ said, while the Swedish biz continued building potentially lucrative mobile networks.

Convoys of lorries would pass through terrorist-controlled areas of Iraq after bribes were paid. Ericsson admitted it may have funded terrorism, with its own internal review stating:

"By avoiding official customs by transporting through areas controlled by militias, including ISIS, it cannot be excluded that Cargo Iraq engaged in facilitation payments (to official Customs officers), bribery and potential illicit financing of terrorism to carry out transportation operations for Ericsson".

Cargo Iraq was a local transport contractor whose owner denied to the ICIJ that his company was paying off ISIS.

The internal probe revealed weak corporate governance, meaning that millions of dollars in payments could not be accounted for.

Ericsson referred The Register to a statement made a fortnight ago when asked for comment about the latest revelations. That statement said: "Unusual expense claims in Iraq, dating back to 2018, triggered a review that uncovered compliance concerns about breaches of the company's Code of Business Ethics. Investigations of these concerns led to a subsequent and detailed internal investigation that was undertaken by Ericsson in 2019, supported by external legal counsel."

It admitted to "corruption-related misconduct", as well as "the use of alternate transport routes in connection with circumventing Iraqi Customs, at a time when terrorist organizations, including ISIS, controlled some transport routes." Ericsson investigators were unable to tell where some payments ultimately ended up, it said.

Several staffers "were exited from the company" as a result, it concluded.

The ICIJ report adds meat to the bones of reports which first surfaced in mid-February that Ericsson had previously been paying terrorists for access to a new market.

Did US turn a blind eye?

A counter-corruption probe by the US foreign ministry in 2013 put senior Ericsson management on notice and resulted in a $1bn bribery settlement in 2019. Yet as rhetoric against Huawei ramped up in recent years, officials talked up Ericsson in favour of Chinese rival Huawei, seemingly omitting any reference to the Iraq misdeeds.

Ericsson, along with Nokia, is one of two Western firms with the R&D expertise to challenge Huawei dominance of the 5G mobile network infrastructure market. With efforts such as OpenRAN taking time to bear commercial fruit, US interests lie in encouraging and promoting the work of non-Chinese companies making 5G base stations and other network equipment.

The Swedish business has done well from Britain's Huawei ban, scooping contracts with O2 Telefónica and BT-EE. Similarly, in the Netherlands Ericsson is also set to displace Huawei in the core of at least one MNO's 5G network. ®

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