Ericsson shareholders have voted against clearing the board of directors and its president, Börje Ekholm, of responsibility for a scandal involving possible payments to Islamic State.

Voters at its annual general meeting (AGM) yesterday, 29 March, included Swedish pension funds AMF, the third-largest owner of Ericsson in terms of the number of votes, and AP1. However, the two funds were divided on their voting intention.

Publishing an update of the results of the AGM, Ericsson said that shareholders representing at least one-tenth of all of the shares in the company voted against discharge from liability of the board of directors and the president for the financial year 2021. This means they could be held personally liable for their actions.

The scandal relates to the publication of the Ericsson List by the International Consortium of Investigative Journalists last month and 30 media partners. The list is an investigation exposing tens of millions of dollars in suspicious payments from 2011-2019 to sustain its business in Iraq.

As a result, the US Department of Justice (DoJ) has said it has notified Ericsson that it has broken a formal agreement to hand over details of alleged corruption in Iraq to DoJ prosecutors.

Despite this, Swedish pension fund AMF revealed its intention to vote for discharge of liability. AMF share manager and owner responsible, Anders Oscarsson, said: “In general, we believe that it is of great importance that Ericsson, a company with approximately 110,000 employees, of which 12,000 in Sweden, has a functioning board. At present, a number of accusations are made against the company, but no inaccuracies have yet been established.

“Pending the investigation of the accusations, our assessment is that the most responsible thing in this situation is to ensure the continued functioning of the company. In contact with the company, we have stated and will continue to present, the importance of transparency in the issues where it is possible, as well as of continuing to ensure both structures and culture that counteract all forms of corruption. In recent weeks, we have also been in contact with other major owners in Ericsson. If it turns out that a mistake has been made, our line is that responsibility must be demanded by the board and management.”

However, another fund, AP1, planned on voting against the discharge of liability for all board members and the president. The fund said it believes that Ericsson has not been sufficiently transparent about Iraq issues and the provision of information to the US DoJ.

AP1 owner-manager, Ossian Ekdahl, said: “The vote on discharge from liability applies to what the board and the CEO have done or failed to do during the financial year 2021. It is equally important now to look ahead. Ericsson's board and CEO must act vigorously to restore the company's credibility and sort out the situation in which the company finds itself.

“We are convinced that the board and CEO are working hard to achieve this. We also have confidence that the board and management will continue the important work against corruption and other financial crime in both their own operations as well as in the company's supply chain. We will therefore vote in favour of the Nomination Committee's proposal for election of the board.”

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