Ericsson CEO says he told staff to hand U.S. full Iraq report in 2019

STOCKHOLM, March 22 (Reuters) - Ericsson Chief Executive Borje Ekholm said on Tuesday he had told staff in 2019 to disclose to the U.S. Department of Justice all information on an investigation the company carried out that year into suspect payments in Iraq.

The Swedish telecoms equipment maker has been under scrutiny over possible payments to Islamic State after Ericsson (ERICb.ST) said this month that U.S. authorities had determined it failed to make sufficient disclosures about its activities in Iraq before entering a deferred prosecution agreement in 2019.

"It's correct that I instructed to disclose fully to the DOJ and then of course we have an internal process ... I will not go into those details," Ekholm said on a call with shareholders, ahead of its annual general meeting on March 29.

The Ericsson board, including Chairman Ronnie Leten, has been backing Ekholm, after proxy firms including Glass Lewis had recommended shareholders vote to remove him following the disclosure and a sharp fall in the company's share price.

Ericsson had only submitted parts of its 77-page investigation in 2019 and not the entire report to the Justice Department, a source familiar with the matter told Reuters on Tuesday.

The 2019 deal between Ericsson and the Justice Department was to resolve a probe into years of alleged corruption in China, Vietnam and Djibouti. Ericsson paid more than $1 billion in penalties and other fees to reach a settlement.

Ericsson disclosed its issues in Iraq last month, triggering a share price fall that wiped more than a third off its market value. It said its 2019 internal probe had identified payments designed to circumvent Iraqi customs at a time when militant organizations, including Islamic State, controlled some routes.

However, it did not disclose the findings of this probe to shareholders in 2019 and only released a statement in February after media enquiries, which led to questions over whether the Justice Department was aware of the investigation. read more

The Justice Department's notice earlier this month said that Ericsson did not properly disclose misconduct and compliance failures in Iraq.

The department was not immediately available for comment.

Since the Justice Department sent a notification of breach to Ericsson on March 2, the company has changed its Chief Legal Officer, replacing Xavier Dedullen with Scott Dresser. read more

Dedullen did not respond to a request for comment.

Several shareholders raised concerns on Tuesday's call about whether any other probes were yet to be disclosed or any potential financial implication as a result of the Justice Department deal breach.

Ericsson executives said they are in talks with the department.

"We are going to do everything that we need to do to address any historical issues or that may come up in the review," said Dresser, who will oversee Ericsson's review over its conduct relating to Iraq and how it was addressed.

Reporting by Supantha Mukherjee in Stockholm; additional reporting by Chris Prentice in Washington DC; editing by Alexander Smith

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