5G Giant Ericsson 'Uninvestible,' Riddled With Corruption

In 2014, as ISIS was at the height of its power in Iraq, Swedish telecom giant Ericsson forged ahead with development of its 5G infrastructure in the region. In the process, it was likely stuffing cash into the pockets of ISIS militants. A leaked internal investigation report obtained by the International Consortium of Investigative Journalists (ICIJ) and published last month reveals that Ericsson "made tens of millions of dollars in suspicious payments over nearly a decade to sustain its business in Iraq," including likely bribes to militants to gain use of a "Speedway" route through ISIS territory. Millions can't be accounted for. And the report didn't just cite widespread bribery and corruption, but also a disregard for the lives of Ericsson's own employees and contractors.

Among the more chilling details: One local engineer identified as Affan said Ericsson instructed him to deliver a letter to an ISIS office requesting permission for Ericsson to continue work in Mosul. Per the report, an ISIS militant later asked Affan to meet at a bridge overpass, where men put a hood over his face and kidnapped him. They instructed Affan to call a senior Ericsson manager, and Affan said the militants told the manager they wanted millions "for every month we worked without ISIS notification" and threatened to attack Ericsson's offices. The report says ISIS forced Affan to remain at home until the money was paid. He was eventually released, with an Ericsson manager only saying "arrangements" were made.

But the BBC points out the report notes that while under house arrest, an Ericsson manager stopped answering Affan's calls. "He abandoned me, he turned off the phone and disappeared." Citi analysts advise that "if the reports are confirmed true, then management’s credibility and judgment will be called into question. We expect Ericsson stock to be uninvestable for most investors for the foreseeable future," per Fortune. Investors are not the only ones with reason to worry. Ericsson, Nokia, and Huawei are the main players when it comes to building 5G networks, and Ericsson is viewed by Western governments as "a crucial alternative to ... Huawei, whose devices have been banned by the United States and other countries over suspicions that they are rigged for espionage," per the Washington Post. (More Ericsson stories.)