By Daniel Bojin and Paul Radu, with contribution from Sweden by Michell Gronlund 

In a courtroom in the Swedish capital of Stockholm, a telecommunications executive and his employer have been fighting a pitched battle to see who is dirtier.  Ericsson, the Swedish telecommunication giant, claims Thomas Lundin, their former general manager in Romania, pilfered $7 million from them. 

Lundin says the $7 million was part of a company-approved slush fund used to bribe Romanian officials and decision makers to get more business.  The case raises questions about how Western businesses really work in Eastern Europe and comes at a time when Swedish prosecutors are looking at a similar case involving officials at Teliasonera who allegedly bribed Uzbek officials for a 3G license.

Lundin says those bribes are the only reason Ericsson's business in Romania grew from virtually zero to US$1 billion.

“The market share increased from almost zero to about 60 percent. This increase in the market share was due to bribes. These bribes were eventually supplied by Ericsson,” Lundin said in court records.

But while the two sides argue over how the money was used, it is clear from court records that Ericsson set up sophisticated offshore companies and bank accounts designed to purposefully hide payments of money to so-called “agents” or persons who helped the company increase its business.  Just who these agents are is not clear although Lundin said they were Romanian officials and decision makers who were bribed.

Fredrik Hallstan, a spokesperson for Ericsson said the company has never paid bribes and blamed Lundin, saying the courts had so far ruled in their favor. 

Worldwide Commission Scheme

The case between Ericsson and Lundin, a Swedish citizen who worked for the company from 1979 until 2003, developed in secrecy as both sides tried to settle the matter in aSwedish Arbitration court.  The court sided with the company and ruled that Lundin should repay more than $7 million plus interest and court costs to Ericsson.  Lundin went ahead and sued Ericsson through the civil courts. The case is ongoing with the next hearing scheduled for Wednesday (March 6).  The case might have remained secret had not a Romanian stockbroker peripherally involved in the deal accused Ericsson of paying the bribes on Icelandic television.

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