Ericsson Employees Summoned in Greek Probe of Defense Deal

  • Seven current, former staff served in corruption investigation
  • Company said last week it’s cooperating with U.S. authorities

Ericsson, the maker of wireless networking equipment, said seven current and former employees were summoned by a Greek prosecutor investigating allegations of possible corruption in the 1999 sale of an airborne radar system used in defense.

The investigation involves Ericsson Microwave Systems, a unit the company sold in 2006 to Saab AB, Ericsson said Sunday in a statement. The company said it transferred all the records, agreements and documentation to the buyer, and that it will cooperate with authorities. It didn’t identify the employees still with Ericsson.

“Since an investigation is ongoing, where present and former employees have been served, it is not appropriate for Ericsson to comment further on the substance of this matter,” the Stockholm-based company said.

The Greek probe marks the second time in a week Ericsson has publicly addressed corruption allegations. Last week, shareholder Nordea Asset Management criticized Ericsson for a lack of disclosure, saying the company failed to properly inform the market about a U.S. anti-corruption probe.

"Ericsson has had significant issues managing corruption risks in their business operations, Sasja Beslik, head of Responsible Investment at Nordea Asset Management, said Monday in an e-mail. "The company is firm in their communication that they don’t tolerate it, however evidence is telling another story. Confidence in their ability to operate in complex business ethics environments has decreased significantly with these latest cases."

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.

Ericsson shares rose 1.6 percent at 1:27 p.m. in Stockholm to 64.80 kronor.

Last week, Ericsson said it was cooperating with U.S. authorities since receiving a March 2013 request to provide information in a matter involving its anti-corruption program and the U.S. Foreign Corrupt Practices Act. The company said then that it was working “diligently” to answer U.S. authorities’ questions.

The U.S. review involves allegations of recent corruption and events from earlier years, including in China, Svenska Dagbladet reported on June 16, without saying how it obtained the information.

The company didn’t say whether the U.S. and Greek investigations are related. Ericsson said its current and former employees haven’t been provided with the full relevant documentation from the investigation, and haven’t been questioned by the Greek prosecutor.

Saab purchased Ericsson Microwave Systems and several other defense assets for 3.8 billion Swedish kronor ($460 million) in a deal announced in June 2006 and completed later that year.

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