Volvo execs convicted for Saddam-era bribes

Two former Swedish executives with Volvo's construction equipment subsidiary were convicted on Tuesday for paying bribes to the regime of Saddam Hussein to bypass restrictions related to the United Nations’ Oil-for-Food Programme.

The two men, Rune Lundberg, 61, and Håkan Nirstedt, 49, were found guilty by the Eskilstuna District Court of having offered 24 million kronor ($3.6 million) in kickbacks to the regime in order to secure contracts for the sale of wheel loaders and road graders.

The men were also handed suspended sentences and fined $18,000 and $9,000, respectively, according to the AP.

The indicted men worked for Volvo Construction Equipment International AB, which is suspected of having paid bribes worth 20 million kronor ($2.2 million) to win contracts for 145 wheel loaders and 43 road graders in the early 2000s.

In March 2008, Volvo was forced to pay US authorities $19.6 million in fines, as well as return past profits with interest from contracts related to the bribery scandal.

Sweden’s chief prosecutor Nils-Eric Schultz, who is also pursuing a case against truckmaker Scania related to oil-for-food programme bribes, told the TT news agency he was satisfied with the ruling, but refrained from pushing for a corporate fine because Volvo had already paid the hefty fine to US authorities.

“That’s something Scania hasn’t done. So that’s why I also have the possibility of pursuing an asset forfeiture motion and a motion for company fines against Scania,” he said.

“Now I’ve got a little more inspiration to conclude that investigation as well.”

Hans Strandberg, an attorney for one of the men criticized the ruling for ignoring the fact that the UN’s sanction committee was aware that Iraqi authorities demanded kickbacks when it approved the Volvo deal.

“I’d like to appeal and have this reviewed by the court of appeal, but my client decides,” he told TT.

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Sweden’s Volvo regains strength after pandemic puts brakes on earnings

Swedish truck maker Volvo Group was hit by a sharp drop in earnings due to the coronavirus pandemic, but business rebounded at the end of the year.

Sweden's Volvo regains strength after pandemic puts brakes on earnings
Volvo Group CEO Martin Lundstedt. Photo: Adam Ihse/TT

In 2020, the group saw “dramatic fluctuations in demand” due to the Covid-19 pandemic, chief executive Martin Lundstedt said in a statement.

For 2021, Volvo raised its sales forecasts in its trucks division – its core business – in Europe, North America and Brazil.

However, it said it also expected “production disturbances and increased costs” due to a “strained” supply chain, noting a global shortage of semiconductors across industries.

The truck making sector is particularly sensitive to the global economic situation and is usually hard hit during crises.

In March, as the pandemic took hold around the world, Volvo suspended operations at most of its sites in 18 countries and halted production at Renault Trucks, which it owns, in Belgium and France.

Operations gradually resumed mid-year, but not enough to compensate for the drop in earnings.

With annual sales down 22 percent to 338 billion kronor (33.4 billion euros, $40 billion), the group posted a 46 percent plunge in net profit to 19.3 billion kronor (1.9 billion euros).

Operating margin fell from 11.5 to 8.1 percent.

However, the group did manage to cut costs by 20 percent.

“We have significantly improved our volume and cost flexibility, which were crucial factors behind our earnings resilience in 2020,” the group said.

Volvo's business regained strength in the second half of the year.

“Customer usage of trucks and machines increased when the Covid-19 restrictions were eased during the summer and this development continued during both the third and fourth quarters,” it said.

“Both the transport activity and the construction business are back at levels on par with the prior year in most markets.”

For the fourth quarter alone, the company reported a 38-percent rise in net profit from a year earlier.