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IRAQ

Volvo settles Iraq bribery case with US authorities

Volvo has agreed to pay $19.6 million in fines, as well as return past profits with interest from contracts implicated in a bribery scandal related to the UN Oil-for-Food Programme in Iraq.

Published: 20 March 2008 17:05 CET

Under the settlement, Volvo enters into a consent agreement with the U.S. Securities and Exchange Commission (SEC) and a deferred prosecution agreement with the U.S. Department of Justice (DOJ) resolving issues related to the activities of two of its subsidiaries in Iraq under the UN programme.

“The incident is, of course, regrettable, but we do note with some satisfaction that the authorities spoke favourably of the cooperation by Volvo as well as Volvo’s own investigation and measures”, said Volvo CEO Leif Johansson in a statement.

“It is important that we all now learn from what occurred.”

Volvo was one of 2,000 firms listed in a United Nations investigator’s 2005 report detailing bribes to former Iraqi dictator Saddam Hussein’s regime, in contravention of international sanctions against the country.

The bribes are alleged to have been made within the framework of the now scandal-ridden Oil for Food programme. Saddam Hussein gained up to $1.8 billion in bribes during the sanctions era.

Volvo will charge $10 million of the fines to its 2008 first quarter operating income.

The settlement also stipulates that Volvo will improve internal compliance measures between Volvo and its subsidiaries.

VOLVO

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.

Published: 3 February 2021 12:21 CET
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.

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