Ericsson investors threatening to sue company's CEO Borje Ekholm over suspected ISIS payments

International investors are threatening to sue Ericsson's CEO and board members over the Swedish telecoms equipment maker's payment of probable funds to the ISIS terrorist organization, which caused its stock to plummet by a third.

At Tuesday's annual conference, one of the world's largest sovereign wealth funds, and a top-10 Ericsson shareholder will vote against releasing CEO Borje Ekholm and many other members from accountability.

Cevian Capital, Europe's largest activist investor and one of Ericsson's top five shareholders, indicated on Monday morning that it would support the expulsion of all trustees, including Ekholm.


Stakeholders should vote against Ekholm as well as other members, according to Glass Lewis and ISS, the two largest proxy advisory firms whose advice is accepted by several traders.

Last month, Ekholm revealed that money was paid for transit lines in Iraq held by extremist organisations like ISIS and that Ericsson couldn't prove whether the money went to ISIS or not.

The US Department of Justice responded earlier this month, claiming that Ericsson had broken its pretrial diversion arrangement for the 2nd attempt, which was enforced in a deal for bribes in five nations in 2019. Ericsson's stock dropped by a third in two weeks before stabilising in recent times.

Ericsson's 3 biggest investors, the Wallenberg family investment vehicle, holding firm Industrivarden, and Swedish pension scheme AMF, will all vote to release Ekholm and the board members from accountability, ensuring Ericsson a plurality. The incident has put a lot of pressure on Ekholm, who was generally lauded until lately for turning around Ericsson and re-establishing it as the main network equipment gear maker ahead of Huawei of China and Nokia of Finland.

Cevian wants Investor and Industrivarden's vice-chair posts to be eliminated. Last Thursday, Ericsson's board of directors released a statement of support for Ekholm.