STOCKHOLM, March 28 (Reuters) – Main Ericsson (ERICb.ST) shareholders will vote in opposition to a movement to clear some board members of accountability over attainable fee of bribes to militant organisations in Iraq, deepening a disaster on the Swedish group that has knocked 1 / 4 off its market worth.
Shareholders, together with Cevian Capital, Swedbank Robur (SWEDa.ST) and Norway’s wealth fund, plan to vote in opposition to discharging the board members of legal responsibility at Ericsson’s annual basic assembly on Tuesday.
The shareholder vote is more likely to be near a ten% threshold that may give traders the best to sue board members sooner or later beneath Swedish firm legislation.
Ericsson has been beneath scrutiny by the U.S. Division of Justice and from shareholders for not correctly disclosing that its 2019 investigation had discovered the corporate might have paid militant organisations in Iraq.
“We nonetheless lack the data essential to make an knowledgeable judgment of what went incorrect, why, and who must be held accountable,” Cevian mentioned. “Given the lack of expertise and the magnitude of the injury, we now have no alternative however to carry your complete board accountable.”
Cevian owns just below 5% shares in Ericsson.
Investor AB (INVEb.ST) together with Primecap Administration, BlackRock (BLK.N) and AB Industrivärden (INDUa.ST) are additionally amongst main traders within the firm, Ericsson’s web site mentioned.
Norway’s $1.3 trillion sovereign wealth fund mentioned it might vote in opposition to granting a discharge to 5 of the corporate’s board members, together with Chief Govt Borje Ekholm.
“When voting on a proposal to discharge the board of duties, we are going to take into account whether or not any data raises affordable doubt in regards to the board’s actions,” mentioned the fund, which has round a 1.9% stake primarily based on Refinitiv information.
Fund supervisor Swedbank Robur, which has a 3.9% stake, mentioned: “We won’t grant discharge of legal responsibility for the board members and CEO.”
It additionally mentioned it nonetheless had confidence within the board and CEO, and would vote for the Nomination Committee’s proposal to nominate them.
Swedish enterprise each day Dagens Industri cited fund managers Nordea Funds and Lansforsakringar Fondforvaltning, with a 1.1% stake and a 0.3% stake respectively, as saying they might vote in opposition to discharge from legal responsibility for the board.
Fund supervisor Avanza Fonder, which has lower than 1% of Ericsson, mentioned it might vote in opposition to discharge from legal responsibility for Ekholm and board members who’re a part of Ericsson’s Audit and Compliance Committee.
“We … wish to let our dissatisfaction with the dearth of transparency within the severe breaches recognized in Ericsson be identified,” Avanza Fonder CEO Jesper Bonnivier mentioned.
Sweden’s shareholders affiliation, representing small shareholders, advised Reuters it might additionally vote in opposition to.
Underneath the Swedish Firms Act, an organization or shareholders can sue board members or the CEO if a gaggle representing not less than a ten% stake within the firm votes in opposition to ratifying acts of the CEO up to now 12 months.
Telecom gear maker Ericsson mentioned: “We’re awaiting the results of the vote at tomorrow’s AGM and can remark additional then.”
‘CHALLENGING SITUATION’
Investor AB, Ericsson’s largest shareholder by way of each capital and votes, and Industrivarden mentioned they deliberate to vote in favour of discharge of liabilities.
Investor AB, backed by the Wallenberg household, mentioned it had continued full confidence in Ericsson’s board and CEO.
“It will be important that the corporate’s Board and Administration really feel they’ve our help on this difficult state of affairs,” Investor AB CEO Johan Forssell mentioned in an announcement.
It’s uncommon for shareholders in huge Swedish firms to not grant discharge of legal responsibility, and any such transfer could be more likely to elevate strain for a boardroom overhaul.
In 2014, a scandal over telecoms firm Telia Firm’ (TELIA.ST), then referred to as TeliaSonera, enterprise dealings in Uzbekistan pushed shareholders to vote in opposition to discharging former CEO Lars Nyberg from private legal responsibility in 2014.
Ekholm, who had served as CEO of Investor AB, took over as CEO of Ericsson in 2016. He oversaw a turnaround of the corporate and in 2019 settled a U.S. authorities probe for alleged fee of bribes from not less than 2000 to 2016 in nations together with China, Vietnam and Djibouti.
In the identical 12 months, Ericsson investigated allegation of bribes in Iraq however selected to not disclose the findings to shareholders. It launched particulars in February this 12 months after media enquiries, sparking the present rigidity. learn extra
“Unquestionably Borje has accomplished a great job of turning across the firm, however this scandal clearly places a darkish cloud over his efforts,” mentioned Paolo Pescatore, an analyst at PP Foresight.
The Ericsson board, together with Chairman Ronnie Leten, has additionally been backing Ekholm, after proxy corporations, together with Glass Lewis, had beneficial shareholders vote to take away him following the disclosure and a pointy fall within the firm’s share value. learn extra
Ericsson shares closed 1% increased on Monday.
Reporting by Supantha Mukherjee and Helena Soderpalm in Stockholm; extra reporting by Terje Solsvik and Gwladys Fouche in Oslo and Anna Ringstrom in Stockholm, enhancing by David Evans, Jason Neely and Jane Merriman
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