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Sweden’s Ericsson Investigated Over Taxes

May 22, 2003

STOCKHOLM, Sweden (AP) _ Swedish and Swiss investigators raided offices and banks in and around Zurich as part of an investigation into whether the telecommunications company LM Ericsson held back information for a required tax audit, officials said Thursday.

Authorities in Zurich said they and Swedish officials conducted searches and seized documents, business records and electronic information.

``It is still too early to say what importance the confiscated material may have for the Swedish investigation,″ said chief prosecutor Lage Carlstroem of Sweden’s Economic Crimes Bureau who was in Zurich for Wednesday’s raids.

Swiss officials said the raids were also focusing on whether a Swiss firm using the Ericsson name was setting aside money for fraudulent purposes.

Rudolf Buergin, a spokesman for Swiss bank UBS AG, confirmed it was cooperating in the search after it discovered some unusual transactions in bank accounts and alerted Swiss authorities.

But Ivo Hoppler, a Zurich district attorney, said his own investigation was looking into people involved with a separate company, Ericsson Marketing & Kommunication AG, which is not part of the Swedish telecom. He didn’t elaborate.

The raids were related to an ongoing investigation of the company by Swedish tax officials, Ericsson spokeswoman Pia Gideon told The Associated Press. She said the company and the authority have discussed how Ericsson should report its taxes.

Last year, Carlstroem said Ericsson was being investigated to see whether it had obstructed a tax audit involving 2.5 billion kronor ($317.8 million) paid to marketing consultants.

In a 2001 audit of Ericsson’s 1999 tax records, tax officials concluded the company did not provide sufficient documentation to support the deductions and ordered Ericsson to pay another 100 million kronor ($12.7 million) in taxes.

Gideon wouldn’t comment on the nature of the documents seized or how they relate to Ericsson’s tax reporting requirements.

Ericsson has been battered in the past two years as operators continued to curb spending on their current networks and delay plans for new, faster wireless networks.

The company has lost money every quarter since 2001. It reported a loss of 4.3 billion kronor ($516 million) during the quarter ending March 31 compared with a loss of 3 billion kronor a year earlier.

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AP Writer Ernst Abegg in Zurich contributed to this report.

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On the Net:

Ericsson: http://www.ericsson.com

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