(Reuters) – Investors are set to publicly rebuke Ericsson chief executive Borje Ekholm over a scandal involving potential payments to Islamic State in a vote on Tuesday.
Mr. Ekholm’s handling of an internal investigation into Ericsson’s operations in Iraq has come under scrutiny after the US Department of Justice said the company breached a deferred prosecution agreement from 2019 for failing to inform US authorities of the potential misconduct she discovered there.
The risk of a hefty fine for the breach slashed Ericsson’s market capitalization by a quarter and angered investors who received no information about the company’s investigation until the media are investigating this earlier this year.
At Ericsson’s annual general meeting, shareholders will vote, among other things, on whether Mr. Ekholm and other board members could be personally liable for their actions.
Under Swedish law, if board members are not discharged of their obligations for the previous year by shareholders holding at least 10% of the shares, they can be sued by the company and its investors.
Based on shareholder responses contacted by Reuters, the votes will cross the 10% threshold.
While losing the vote does not mean Mr Ekholm should resign, it will raise further questions about his handling of the group.
Mr Ekholm, the company’s chief financial officer Carl Mellander and Ericsson have been named as defendants in a US class action lawsuit for misleading investors about its transactions in Iraq.
In 2014, a scandal over business dealings in Uzbekistan of the telecommunications company Telia Company, then called TeliaSonera, led shareholders to vote against the discharge of former CEO Lars Nyberg from personal liability in 2014.
Mr Nyberg was later charged with corruption, but was acquitted by a Swedish court.