Investor Cevian Capital urges Ericsson to take action and restore shareholder confidence following a recent bribery scandal.
Ericsson’s share price took an enormous blow. Value dropped by more than a third throughout last week. Investor Cevian Capital is calling on Ericsson to restore shareholder confidence as fast as possible.
The decline is due to Ericsson’s involvement in a bribery scandal in Iraq. The organization paid ransom to the terror group Islamic State (IS) for kidnapped employees and the prospect of continuing operations in IS-controlled areas. In doing so, the Swedish network giant violated settlement terms previously agreed upon with US authorities.
Shareholder Cevian Capital lets us know that the scandal has completely eroded shareholder confidence in Ericsson’s governance. The investor urges Ericsson to come clean and restore confidence.
Moreover, the major shareholder wants Class A shareholders to be allowed to change to Class B shareholders. Furthermore, Cevian Capital wants to see the two vice-chairmen currently heading the Board of Directors to be replaced by a single, independent vice-chairman.
No response from other Class A shareholders
Cevian Capital says it’s fulfilling its duty as a Class A shareholder. The investor states that Class A shareholders are responsible for redirecting Ericsson’s governance when its future and shareholders are at stake.
Cevian Capital, as the second-largest Class A investor, owning a 5.5 percent stake. Wallenberg, Ericsson’s largest Class A investor, owns a 8.8 percent stake. Industrivarden (2.6 percent) is the third-largest Class A investor.
All three Class A investors are represented on the Board of Directors. Wallenberg and Industrivarden have yet to respond to the bribery scandal and Cevian Capital’s response.