Ericsson CEO reveals the company may have paid ISIS for access to transportation routes
On February 16, 2022, Swedish telecoms equipment maker Ericsson CEO Borje Ekholm released a statement in which he conceded that the company could have made payments to terrorist organization ISIS in Iraq in exchange for access to transport routes to evade local customs.
An internal investigation initiated in 2019 looked at the conduct of Ericsson employees, vendors and suppliers in Iraq during the period from 2011 – 2019 and found ‘serious breaches of compliance rules’ as well as evidence of corruption related misconducted including ‘making a monetary donation without a clear beneficiary; paying a supplier for work without a defined scope and documentation; using suppliers to make cash payments; funding inappropriate travel and expenses; and, improper use of sales agents and consultants.’
While the company identified ‘unusual expenses dating back to 2018,’ the probe could not ‘determine the final recipients’ of the money. However, there was evidence pointing to the use of alternative transport routes, some of which were controlled by terrorist groups, including ISIS, as a way to avoid Iraqi customs.
In response to the findings, several employees were ‘exited from the company’ amid a number of additional disciplinary and remedial actions.
In 2019, Ericsson paid over $1 billion in penalties to resolve bribery and corruption investigations by the United State Department of Justice (DoJ) and the Securities and Exchange Commission (SEC) over violations of the US Foreign Corrupt Practices Act in response to findings that Ericsson had made and falsely recorded tends of millions of dollars in bribes over a long period of time.
In response to the allegations, shares in the Stockholm-based company fell as much as 14.5 percent.
- We know that the cargo supply chain has been both a conduit for carrying out terror attacks and a means by which to transport and smuggle goods and materials used to fund and commit acts of terror.
- This most recent revelation from Ericsson CEO Borje Ekholm represents the exploitation of the supply chain route itself as a channel for funneling money to terrorist organizations.
- We know that there are regions in the world where paying bribes in exchange for given benefits is commonplace. Bribes may be made by or on behalf of commercial entities or even sovereign nations.
- This is not the first time that an alleged deal with a known terrorist entity has been reported in exchange for certain benefits.In December 2021, it was reported that an Italian government body will initiate a probe into documents which appear to confirm long-held accusations that Italy made a deal to not interfere with Palestinian terror attacks against Jewish and Israeli targets, including a 1982 assault on the Great Synagogue of Rome in which a two-year old boy was killed and 37 others injured, in exchange for not attacking other Italian interests.
- It is highly likely that there are many similar cases involving bribery and corruption in exchange for access which will come to light in the aftermath of this most recent case, particularly given the competitive supply chain environment and the need to transport goods as quickly and directly as possible.
- It is important to recognize that by making these deals, companies and even sovereign states are encouraging terrorism and terrorist groups and funding their operations, a move which will later likely come back to hurt them not just in possibly becoming the target of an attack but in the damage to reputation over and above the legal and personal implications for those involved.We can already see the economic impact that these allegations have had on Ericsson stock prices.
- We clearly cannot rule out the likelihood that other companies or entities have made similar deals with known terrorist organizations to allow for the free movement of goods and merchandise through terrorist-controlled areas.
- We must consider the implication of this incident, particularly in high traffic cargo transport regions and channels including the Bab el-Mandeb Strait separating Yemen on the Arabian Peninsula and Djibouti and Eritrea in the Horn of Africa, where roughly 6.2 million barrels of crude oil and petroleum products are transferred daily toward Europe, the United States and Asia, among other goods. This channel, among many others throughout the world, could turn into a hub for terrorists looking to fund their operations using monies paid out by supply chain giants to avoid customs, make quicker deliveries by accessing alternative routes or attaining immunity from piracy or other attacks. It is also important to consider how quickly a scenario like this could escalation from bribery to more sinister attacks.
- Given the complexity of the supply chain, which includes the use of third parties such as vendors and suppliers, it is necessary to ensure that there are proper protocols in place as well as transparency with respect to how and where money is channeled.
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