© Reuters. Ericsson logo seen at China International Import Expo (CIIE) in Shanghai, China, November 5, 2020. REUTERS / Aly Song
Authors Johan Ahlander and Nate Raymond
STOCKHOLM (Reuters) – Swedish telecommunications company Ericsson (BS :), its CEO and chief financial officer have been named as defendants in a US class action lawsuit for defrauding investors about the company’s business in Iraq, according to a New York court filing on Friday.
Ericsson is at the center of a scandal over potential payments to the Islamic State in Iraq. On Wednesday, the U.S. Department of Justice said it violated the 2019 Deferred Prosecution Agreement (DPA) because it did not fully disclose details of its operations in Iraq.
A lawsuit filed by the law firm Pomerantz in the Eastern District Court of New York states that Ericsson, among other things, misled investors by exaggerating the extent to which it eliminated the use of bribes.
An Ericsson spokesman could not be immediately reached for comment, but Ericsson said in a brief statement that the company and “certain (company) officials” had been named as defendants in connection with “allegedly false and misleading statements” regarding Iraq.
Under the terms of the 2019 DPA, Ericsson paid more than $ 1 billion to solve a series of corruption investigations, including bribery in China, Vietnam and Djibouti, and agreed to cooperate with the ongoing investigation department.
Ericsson has lost almost a third of its market value since the media reported that there was an alleged myth in February.
Ericsson said an internal investigation, which ended in 2019 but was only made public in February after media inquiries, identified payments aimed at circumventing Iraqi customs at a time when militant organizations, including Islamic State, controlled some routes.
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