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Activist investor Cevian demands sweeping reforms at Ericsson

Europe’s biggest activist investor calls for sweeping reforms in Ericsson’s corporate governance in an attempt to restore confidence in the cumbersome telecom maker after its shares lost a third of their value Possible payments To the terrorist organization ISIS in Iraq.

Cevian Capital, which is the second-largest shareholder in Ericsson in terms of capital, claims to curb the power of its two major traditional investors.

Investor, the investment tool of the Wallenberg family of manufacturers, and the main local rival of the holding company, Industrivarden, both hold high-grade A-class shares that allow them to control Erickson’s board through the role of vice chairman each.

Savian wants Ericsson to include a conversion clause in its bylaws to allow for the conversion of Class A shareholders to regular Type B investors, and for the dual system of deputy chairmen to be removed and an independent director appointed in their place.

“There is complete distrust of Erickson’s corporate governance. It needs to be re-established. Erickson’s inferior corporate governance costs shareholders NIS 135 billion ($ 14 billion). That’s a crazy amount,” Christer Gardel, co-founder of Cvian, told the Financial Times.

Erickson is complex The crisis is growing after it revealed last month that it had made payments in Iraq that could have flowed into the terrorist organization ISIS. The U.S. Department of Justice did Determined That the Swedish group violated its deferred lawsuit agreement from a $ 1 billion settlement in 2019 with U.S. authorities on bribery and corruption in five countries, but not in Iraq.

Analysts at Citi called Erickson “uninvestable,” while the DoJ determined what the penalty would be, if any, for this and previous October breach for unknown reasons.

An investor currently holds 7.7% of the share capital December 31, 2020, The last date was revealed, but controlled by 22.8% of the vote. Industrivarden had only 2.6% of the capital but 15.1% of the votes, while Savian had 5.5% of the capital and 3.3% of the votes.

“We really need to sharpen every aspect of corporate governance in a company. Type A shareholders are given a 10-fold right to influence a company, but it’s also a must. Obviously they did not do it well enough. We can not sit still anymore. They need to take responsibility.” Said Gardel.

Burja Eckholm, CEO of Erickson, received compliments from investors for his turnaround in the company, as well as for clearing a bribery and historical corruption scandal. Became a boss in 2017, is not enough.

IndustryWarden declined to comment. Erickson and an investor did not immediately respond to requests for comment.

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