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Ericsson Sued by U.S. Terror Victims Over Alleged Iraq Bribe Payments

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Ericsson

is being sued by hundreds of Americans who say the company’s alleged payment of bribes to al Qaeda and Islamic State—protection money meant to let it operate in Iraq—also helped fund acts of terror.

The Stockholm-based telecommunications company, which was sued Friday in federal court in Washington, D.C., faces claims from more than 500 U.S. service members and civilians who were victims of terrorist attacks and hostage takings from 2005 to 2021, along with the families of those killed in attacks.

They brought their claims under the Antiterrorism Act of 1990, which allows victims of terrorism to seek damages in U.S. courts, including against companies and individuals that aid and abet terrorism.

Ericsson said it would “zealously defend against” the suit.

“Any effort to connect Ericsson to the actions described in the complaint will fail on the merits,” the company said.

The terror victims accused Ericsson of paying money to terrorist factions that controlled swaths of Iraq, in a bid to stop them from hampering its business. The financing ultimately aided a campaign of kidnapping, torture, bombing and murder, they said.

The company and its U.S. subsidiary “funded the terrorists to leave them alone,” the victims said in their legal complaint.

“The payments saved Ericsson money,” they said in the complaint. “It was cheaper to pay off al-Qaeda and Islamic State than to invest in the security necessary to mitigate the terrorists’ threats.”

The money that Ericsson allegedly sent to terrorists in Iraq ultimately helped finance attacks in Iraq, Afghanistan and Syria, the victims allege.

Separately from the lawsuit,

Ryan Sparacino,

a lawyer for the victims, urged the U.S. Justice Department and the Securities and Exchange Commission to investigate Ericsson’s officers and employees, including their legal and compliance personnel.

The suit follows Ericsson’s admission in February that it had found “serious breaches of compliance rules” in Iraq, including evidence of corruption-related misconduct. Ericsson has been active in the country following the lifting of a United Nations embargo that led to the reopening of the country’s telecommunications equipment market.

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Ericsson, which made the findings after a 2019 internal investigation, said some payments went to intermediaries. It also admitted it used alternate transport routes to circumvent Iraqi customs when terrorist organizations, including Islamic State, controlled some of those routes.

The company said in February that it couldn’t determine the ultimate recipients of payments it had made. Ericsson after the probe fired several employees and improved its internal processes, it said.

Ericsson in 2019 paid about $1 billion to settle with U.S. prosecutors over allegations of bribery in five countries, a deal that didn’t include any conduct in Iraq. The U.S. Justice Department in October said Ericsson had violated that agreement, and the company in March said it was told its disclosures on activities in Iraq were “insufficient.”

The ATA, as the antiterrorism law is sometimes known, allows victims to seek large damages from perpetrators and parties that aid them. The law has led to major judgments against foreign states, some in the billions of dollars.

Write to Richard Vanderford at richard.vanderford@wsj.com

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