Swedish telecoms giant Ericsson, which is currently embroiled in a scandal regarding possible bribes to the Isis terror group in Iraq, is hosting its annual general meeting today, March 29.

Several foreign and domestic major shareholders are set to deal a major blow to Chief Executive Börje Ekholm and the firm’s board, with plans to vote against discharging them from liability. This includes Norway’s USD 1.3trn oil fund and Swedish activist fund Cevian Capital, the Financial Times writes.

Proxy advisory companies Glass Lewis and ISS, two of the largest in their field, have both recommended voting against the CEO and other directors, according to the FT.

Börje Ekholm has said that payments were made for transport routes in Iraq in areas under Isis control but also stated there was no evidence whether the money actually went to the terror group or not.

One top-10 shareholder has told the Financial Times that Ericsson’s governance is “dysfunctional”.

“Basically, we don’t trust them. We wonder whether they’re hiding something, otherwise they would come clean,” the source added.

Norway’s oil fund has stated that it “cannot discharge based on the information we have now”. Cevian’s founder Christer Gardell announced to Swedish media a week ago that the firm aims to vote against discharging from liability. Swedbank Robur and Länsförsäkringar announced the same.

Life insurer Folksam announced in an official statement today that it could not vote against discharging of liability, as Ericsson’s information on the matter has been severely lacking.

However, Cevian, which is one of the five largest shareholders in the firm, still aims to vote for re-election of the board and the Chief executive.

Furthermore, Ericsson’s three largest owners have announced they will vote to discharge Ekholm and the board from liability. These owners are pension company AMF, the Wallenberg family’s investment company Investor and Industrivärden, another major Swedish investment firm.

AMF issued an official statement today, with Head of Equities Anders Oscarsson saying that it was imperative that Ericsson, a company with over 100,000 employees, had a working board.

According to the FT, Cevian has directed some heavy criticism towards Investor and Industrivärden over their ability to control Ericsson through class A shares, which carry ten times the voting power of class B shares. Gardell and Cevian want the two investment firms to each lose their deputy chair positions, claiming the corporate governance in Ericsson needs to be re-established.

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