About the Ericsson List Investigation

ICIJ, together with 30 media partners in 22 countries, spent months investigating leaked Ericsson documents that detail alleged corrupt practices in 15 countries, including in Iraq where the Swedish telecom giant may have made payments to ISIS. Story written by Fergus Shiel, Managing Editor of ICIJ.

Telecom giant Ericsson sought permission from the terrorist group known as the Islamic State in Iraq and Syria to work in an ISIS-controlled city and paid protection money to smuggle equipment through ISIS-held zones on a route known as the “Speedway,” according to a leaked internal investigation.

The report obtained by the International Consortium of Investigative Journalists reveals Ericsson made tens of millions of dollars in suspicious payments in Iraq, financing slush funds, trips abroad for defense officials, and payoffs to executives at corporate customers and possibly terrorists.

These documents provided the basis of ICIJ’s Ericsson List investigation.

The documents show that company executives dismissed internal recommendations to halt operations in the country after ISIS fighters swept in. They reveal that Ericsson asked a partner to seek “permission from ‘local authority ISIS’” to continue to work in the terrorist-controlled city of Mosul and that an unvetted transportation contractor paid protection money to militias to avoid Iraqi government customs taxes by hauling Ericsson equipment through ISIS-controlled areas.

The extraordinary information in the documents was kept hidden from the public by Ericsson until ICIJ and its media partners approached the company with questions about them in recent weeks.

After obtaining the documents, ICIJ  — a nonprofit network of journalists based in Washington, D.C. — shared them with more than 110 journalists from 30 media partners in 22 countries,  including Sweden’s Sveriges Television, Lebanon’s Daraj Media, Germany’s NDR and The Washington Post.

ICIJ and its partners verified the leaked internal records’ authenticity and spent months examining scores of other documents. Journalists also interviewed a former Ericsson contractor kidnapped by ISIS, former employees of Ericsson, government officials, contractors and other industry insiders in Iraq, the United Kingdom, the United States, Jordan, Lebanon and elsewhere.

These documents show Ericsson conducting internal investigations of alleged corrupt practices in 15 countries, including Iraq. In 2019, Ericsson agreed to pay $1 billion to settle a U.S. case, one of the largest financial penalties ever for corporate fraud. The settlement does not mention Iraq or the other internal investigations.

Formally known as Telefonaktiebolaget LM Ericsson, the company has roughly 100,000 employees in more than 140 countries.

Ericsson List documents reveal a business model in Iraq that relied on politically connected contractors and fixers to do the dirty work of maintaining operations — an approach that government investigations also have exposed as conducive to fraud and other corruption. The documents show a pattern of bribery and corruption so widespread, and company oversight so weak, that millions of dollars in Ericsson payments couldn’t be accounted for.

The revelations come amid fierce industry competition, especially with Chinese power player Huawei, for control of telecom networks in the 21st century.

The U.S. Justice Department made no mention of Ericsson’s business practices in Iraq in its 2019 criminal settlement. A prosecutor told a federal judge in New York that the U.S. didn’t indict Ericsson’s parent company because of unspecified “collateral consequences.”

The leaked documents include 73 pages of the explosive 79-page internal report, which presented the findings of a fraud investigation into an Iraqi project called Peroza. The report was prepared with the help of Simpson Thacher & Bartlett LLP, an international law firm based in New York. The report, while damning, often fails to reach specific conclusions, which suggests an incomplete review of some of the most explosive allegations.

Dated Dec. 11, 2019, the leaked report — prepared under the protection of attorney-client privilege — is a summary of the accounts of 28 witnesses, 22.5 million emails and 4 terabytes of documents. The investigators captured and copied company computers and mobile phones, and they reviewed evidence from 2011 to 2019. The documents reviewed include accounting records, maps, social media posts and color-coded charts.

Ericsson’s Peroza project modernized and expanded the network of Iraqi telecom carrier Asiacell. The internal probe was triggered by the discovery of the embezzlement of $308,000 by Peroza project manager Roger Antoun, who later returned money taken from what Ericsson investigators described as an “uncontrolled slush fund.”

The probe found that Ericsson had paid — “with deficient proof of work” — more than $27 million to an intermediary firm, Al-Awsat, run by a politically connected Iraqi fixer, and that Al-Awsat, in turn, paid other subcontractors without proper vetting. Ericsson investigators also alleged that Ericsson employees arranged through Al-Awsat to pay Asiacell’s chief executive a $500,000 “commission,” disguised by two sham purchase orders, to win the Peroza deal.

Ericsson was found to have used sham contracts, padded invoices and faked accounting to make secret payments to members of the powerful and wealthy Barzani family from Iraq’s semiautonomous Kurdistan region. Key U.S. allies in the war against terror, the Barzanis also hold the largest stake in the Korek mobile phone company, Ericsson’s biggest customer in Iraq.

n a statement, a spokesperson for Korek’s chairman of the board, Sirwan Barzani, said that after Daesh (another name for ISIS) took Mosul in 2014, Barzani rejoined the Kurdish military forces, known as the Peshmerga, to defend his people and stepped back from his role with Korek.

The Ericsson review says Rasech Barzani, a consultant, collected $1.2 million from Ericsson for offering “business intelligence and facilitation to the chairman of Korek.” Rasech Barzani did not respond to requests for comment.

After ICIJ and its partners sent questions to Ericsson, the company’s chief executive officer, Börje Ekholm, told Dagens industri, a rival of ICIJ Swedish media partner SVT, that Ericsson may have paid ISIS to allow company operations in Iraq. Ekholm said the company had identified in 2018 suspicious payments for the use of transport routes controlled by terrorist organizations, “including ISIS.” He said the ultimate recipient of those payments had yet to be identified.

“We can’t determine where money sometimes really goes, but we can see that it has disappeared,” Ekholm said .  He provided this information  despite claiming that, before ICIJ’s inquiries, Ericsson believed that “the materiality” of its internal investigation “did not pass our threshold to make a disclosure.”

Ericsson issued a press release saying that “several employees were exited from the company and multiple other disciplinary and other remedial actions were taken” after it investigated misconduct in Iraq. “Furthermore,” the release said, “Ericsson terminated a number of third-party relationships and prioritized the Iraq country business for enhanced training and awareness activities, policies and procedures, and third-party management processes.”

It is unclear how much the Justice Department knew about abuses in Iraq. The Justice Department and the Securities and Exchange Commission declined to comment on any aspect of the Ericsson case.

Ericsson List documents reveal internal probes into possible corruption — including bribery conflicts of interest, theft and fraudulent travel expenses —  in 14 countries in addition to Iraq: Angola, Egypt, Lebanon, Libya, Portugal, South Africa, Spain, the U.S., Brazil, Azerbaijan, Morocco, Bahrain, China and Croatia.  In Lebanon, for instance, documents indicate that Ericsson spent $37,500 on gifts for telecommunications ministry officials and others from 2010 to 2014.

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