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Tuesday, January 26, 2021

Ericsson meets investors to dispel concerns of corrupt practices

Ericsson will face demands for details about government probes into alleged bribery in its business when the wireless-network maker meets with shareholders on Thursday about its anti-corruption program.

Investors, including Nordea Bank, expect to get more information on what types of investigations Ericsson is embroiled in and what steps the software maker is doing to address the issues, Sasja Beslik, head of responsible investment at Nordea Asset Management, said Wednesday in a phone interview.

“As shareholders, we need to know how systemic this issue is and what markets are involved,” Beslik said. “Shareholders need to better understand Ericsson’s system for handling this and be able to validate the steps taken.”

A series of disclosures and media reports over the last few weeks have raised questions about Ericsson’s practices in countries ranging from Greece to Romania and China. The incidents have put pressure on Chief Executive Officer Hans Vestberg, who was already battling competitors and is under fire from one of his largest shareholders for lackluster share performance.

The meeting with Nordea and other shareholders is set for Thursday at Ericsson’s headquarters outside Stockholm. An Ericsson spokeswoman confirmed the meeting to present the company’s anti-corruption program to a group of investors, declining to identify them.

Ericsson said this week seven current and former employees were summoned by a Greek prosecutor investigating allegations of corruption in the 1999 sale of an airborne radar system. The Greek case marks the second time in a week Ericsson has publicly addressed allegations of graft.

Last week, Ericsson repeated it was cooperating with U.S. authorities since receiving a March 2013 request to provide information in a matter involving the U.S. Foreign Corrupt Practices Act. In 2013, it said the probe was related to a payment system used to win contracts in the 1990s, including orders in Romania. It hasn’t provided details on the U.S. request and hasn’t publicly responded to a Svenska Dagbladet report that the Securities and Exchange Commission has also focused on its operations in China.

Ericsson’s shares have tumbled 20 percent this year, valuing the company at 219 billion kronor ($26.5 billion).

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