STOCKHOLM, Sweden-Ericsson said it believes none of its current employees are guilty of wrongdoing in response to charges of tax evasion leveled against the company by Swedish public prosecutors.
The charges center on technical accountancy issues related to Ericsson’s system for payments to commercial agents from 1998-2000. The company said it has since abandoned that system.
According to Ericsson, prosecutors believe the system was designed to evade tax control, but the company said while the system was in fact flawed and led to misunderstandings, there was never an attempt to evade tax control or taxes.
Ericsson said it modified its system for paying commercial agents in 1998 in response to a Swedish Tax Authority audit of the company that Ericsson said resulted in confidential information about its commercial agents being mishandled and lost. In response to agents’ demands for better control of their anonymity, Ericsson said it changed its system to route payments to agents through payment intermediaries, or service companies.
Ericsson said it believes one of its employees mismanaged the system and used it for personal profit. The employee in question held a position in the company’s Corporate Markets division and had been employed by the company for decades. He was put in charge of administration of payments under the modified system.
The company has filed a criminal complaint in Switzerland against the former employee for misappropriation of funds, with an alternative charge of embezzlement. The company said it has no reason to suspect any other employee was involved in mismanaging the system.
The matter also has been investigated by the Swedish National Economics Crimes Bureau. Ericsson provides further defense of its actions as well as details of the system and the problems it created in an 11-page document posted at its Web site.
