Swedish occupational pension fund AMF said it is backing the board of Stockholm-listed telecommunications firm Ericsson at today’s annual general meeting (AGM), despite accusations levelled at the firm, but national pensions buffer fund AP1 came out as one investor intending to vote against some management proposals.

Ericsson’s share price has suffered in recent weeks amid developments in the scandal about possible payments to the Isis terror group for transport routes in Iraq.

Investors have focused on Ericsson chief executive officer Borje Ekholm’s handling of an internal investigation into operations after the US Department of Justice (DoJ) said the company was in breach of a 2019 deferred prosecution agreement.

Anders Oscarsson, head of equities responsible ownership at AMF, said: “In general, we believe that it is of great importance that Ericsson, a company with approximately 110,000 employees, of which 12,000 in Sweden, has a functioning board.”

He said a number of accusations had been made against the company, but no inaccuracies had yet been established.

“Pending the investigation of the accusations, our assessment is that the most responsible thing in this situation is to ensure the continued functioning of the company,” said Oscarsson.

At today’s AGM he said people would vote for or against discharge from liability for operations in 2021, and that AMF would vote in favour of this.

“Should it later be proven that a mistake has been made, there is still the possibility of making claims against the board,” Oscarsson said, adding that the discharge only referred to known facts, and that new facts were not covered by a possible discharge.

AMF is Ericsson’s third-largest owner in terms of number of votes and is represented on the company’s nomination committee.

Meanwhile, AP1 said it believed Ericsson had not been sufficiently transparent about Iraq issues and the provision of information to the US DoJ.

“As a responsible investor, it is important to get facts and information to be able to assess the situation and possible consequences for the company. Due to the lack of information, we cannot grant discharge from liability for each of the board members, chairman and CEO,” the SEK466bn (€45bn) fund said today.

But Ossian Ekdahl, AP1’s head of ownership, said it was equally important now to look ahead.

“Ericsson’s board and CEO must act vigorously to restore the company’s credibility and sort out the situation in which the company finds itself,” he said, adding that AP1 was convinced the board and CEO were working hard to achieve this.

“We also have confidence that the board and management will continue the important work against corruption and other financial crime in both their own operations as well as in the company’s supply chain,” he said.

AP1 would therefore vote in favour of the nomination committee’s proposal for election of the board, he said.

However, the buffer fund also said it would vote against the board’s remuneration report, saying remuneration levels had not reflected the effects of the provision of information about the investigation.

The manager of Norway’s Government Pension Fund Global is voting against the proposed discharge of Ekholm and several other board members at the AGM, according to its published voting intention.

While giving no specific comment on the case, Norges Bank Investment Management stated in its rationale for the voting these management proposals down: “When voting on a proposal to discharge the board of responsibilities, we will consider whether any information raises reasonable doubt about the board’s actions.”

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