Ericsson Gifts, Trips and Cash Greased Hands in Lebanese Telecom

Rami El-Amin
Lebanese Journalist

The absolute star in the Ericsson documents is former Alfa Chairman and CEO Marwan Hayek, who created a triangle of interests: Alfa, Quality Telecom Services (QTS), owned by his wife, and Ericsson, where his brother-in-law worked in a good position.

It was in 2010.

Lebanese military intelligence had arrested two employees of the Alfa telecom company on charges of collaborating with Israel. I was a reporter for the Lebanese Al-Jadeed channel at the time and did an investigation into the security breach, which had exposed subscribers’ data to hacking for the benefit of Israeli intelligence. 

Alfa, through its media office, had contacted Al-Jadeed, saying it wanted to provide us with “a scoop” that would determine the extent of the breach and the type of data employees had been able to pass on. Since I had followed up on the file, Al Jadeed asked me to go to Alfa and interview its chairman Marwan Hayek. 

As I was working on my report with a colleague photographer, Hayek’s media team was trying to impose the messages it wanted to convey. During the interview Hayek’s media advisor tried to keep away some questions she considered embarrassing. 

After I said I felt Hayek was unable to answer them on his own, an embarrassed Hayek decided to ask his advisor to leave the office where we conducted the interview and answer the questions. 

After we had finalized our report, I received a call from the media advisor, who said she wanted to invite me and Hayek for lunch in an Ashrafieh restaurant to apologize for her interference during the interview. After a few attempts to dodge the invitation, I agreed and went to the restaurant. 

Following a friendly lunch, I left and asked for my car at the Valet Parking service. When the employee brought it, I was surprised to see a small wrapped box on the seat next to the driver’s. It was a frightening sight: a strange canister on the seat of my car. 

“What is this?” I shouted at the employee. 

“Madame (Hayek’s advisor) asked me to put it in your car,” he replied, trying to calm me down.

I left the car standing there with the door open and went back into the restaurant where the advisor was still sitting with Hayek. I asked her anxiously and angrily about the box left in my car. She replied that there was no need to be afraid. It was nothing but a “simple gift,” an, at the time, very modern “Blackberry phone” and “not even worthy of me.”

What she said took away the anxiety, there was still the anger. I gave her back the box and told her this way of dealing with journalists was a “disgrace.” I left her shocked with Hayek, returned to my car, and drove off. 

I told a journalist friend, who was working at the Al-Akhbar newspaper at the time, about the incident. He wrote an article about the company, in which he stated: “Alfa may need a new media campaign to polish its image among citizens. It does not stop inviting media professionals to lunch and does not stop distributing gifts at the end of it.”

Twelve years later, with the Ericsson documents relating to Lebanon in my hand, I recalled that incident. The documents revealed that Alfa managers and employees, headed by Hayek, received 122 new cell phones, as well as other gifts, with a total worth of tens of thousands of dollars. Which made me wonder: was the phone Hayek’s advisor put in my car one of the phones in the Ericsson documents?

The Ericsson Documents’ Importance

The telecom sector, through the WhatsApp tax imposed by the Lebanese government, sparked the popular uprising against the political authority in October 2019. 

Today, more than two years later, the high cost of telecom for the Lebanese is like an indirect tax, that according to an article for Legal Agenda by Wassim Mansour, former General Manager of telecom operator Touch, is reused “for establishing the foundations of the political system that is based on the allocation of resources and their distribution to cronies, buying loyalties and strengthening clientelism.”

The approach Mansour talks about has ruled the telecom sector since it was founded three decades ago. The leaked documents of Ericsson’s internal investigation clearly show how the sector’s transformation into private estates is serving personal interests and perpetuating clientelism and corruption, while achieving fantastic profits.

The Ericsson documents, which were obtained by the International Consortium of Investigative Journalists (ICIJ) and shared with more than 110 journalists from 30 media organizations in 22 countries around the world, including Daraj, reveal that the Swedish company has engaged in illegal conduct in Lebanon, including bribery and numerous violations of the Code of Business Ethics.

The documents include information about giving Ericsson between 2010 and 2019 “gifts” amounting to thousands of dollars to people in the Lebanese telecom sector, including: cash, trips for ministers and advisers on Ericsson’s account, phones and modern communication equipment.  

Hayek: Star of the Ericsson Documents

Regarding the gifts, the Ericsson documents state that “between 2010 and 2014, 40 gifts were purchased with a total value of $37.500 for members of the Lebanese Ministry of Telecommunications, including the minister himself, the Telecommunications Regulatory Authority (TRA) and Alfa Telecom.”

During the investigation Ericsson’s senior account manager, Shadi Issa, said that he was “either asked to purchase the gifts by Tony Abboud or provided with the receipts and expense claims on his behalf.”

Tony Abboud is a sales specialist at Ericsson.

During that period, especially between June 2011 and February 2014, Nicolas Sehnaoui of the Free Patriotic Movement (FPM), was in charge of the telecom ministry. The documents talk about receiving gifts from Ericsson.

Daraj sent a series of questions to former minister Sehnaoui to give him the right to respond. His answers were brief.  He described the relationship between the ministry and Ericsson as “professional.” He also said he did not remember who was the Ericsson employee assigned to coordinate with the ministry. Regarding Ericsson’s gifts to the ministry, Sehnaoui replied he was not aware any gifts had been given.

The star of the Ericsson documents regarding Lebanon is former Alfa Chairman and CEO Marwan Hayek, who enjoys distinguished relations with numerous influential politicians, most importantly FPM head Gibran Bassil. 

The documents include allegations that Hayek used his influence to employ members of his family in both Alfa and Ericsson, while his wife owns a company called Quality Telecom Services (QTS), which installs and maintains sites for Alfa. according to the Ericsson documents, it also “provides gifts, entertainment and hospitality to members of the Lebanese government.” 

“These allegations have substance,” the Ericsson investigation concluded.

Hayek created a network of interests comprising three parties: Alfa, QTS, owned by his wife, and Ericsson, where his brother-in-law Michel Ghadban works in a sensitive position.

The documents show that Ghadban joined Ericsson Lebanon in June 2011 as a network engineer and was promoted to customer manager two years later. “It appears that the promotion was made at Hayek’s request,” according to the documents. 

Ghadban was instrumental in approving purchase orders for a third party, QTS, to cover gifts and entertainment costs for clients, government officials and managers, including Hayek, according to the documents.   From July 12, 2013 to February 21, 2020, Al-Ghadban approved 856 purchase orders with QTS worth $11.9 million, representing 75% of Alfa’s business.

The documents also feature the name of Ericsson’s customer project manager, Saad Chahoud, Hayek’s nephew, who “took advantage of his family relationship with Hayek to be employed in the company and to enhance his position.” 

An Ericsson employee investigated by the company confirmed that Chahoud and Ghadban’s promotions came at the request of Hayek. But the employee did not object and therefore did not report the matter to the company’s senior management. 

In an e-mail sent by Hayek in response to Daraj’s questions, he refused to comment on questions regarding Alfa since he left the company in September 2020. 

He did elaborate on his impact as a successful person on his family, stressing that members of his family were employed in the telecom sector in Lebanon and the region before he returned to Lebanon in 2010 to become Chairman of the Board of Directors at Alfa. And, indeed, there were members of his family who entered the sector during his time in office, while others entered after he left. 

“Because we are a big family, thank God,” he said. 

That, according to Hayek, is apparently reason enough to hire his nephew at Alfa, his son-in-law at Ericsson, and setting up a business directly linked to Alfa that is owned by his wife. Hayek stressed he never used his influence to provide support or promotions to family members, while he did contribute to finding work in remote and marginalized areas such as Akkar.

Boutros Harb, His Wife and the Limousine

In 2015, Ericsson employee Mohamed Dergham covered the costs of a trip to Stockholm for then Telecom Minister Boutros Harb, his wife and son Majd, who is currently a candidate for the parliamentary elections, as well as several of his advisers.  This included: “First-class travel tickets, reservations for luxury hotels and a limousine for the wife, in addition to tourist tours.” Total costs, according to the Ericsson documents, amounted up to $40,000.

The gifts purchased for the Telecom Ministry, including the minister, and the Communications Regulatory Authority, as well as Alfa, combined with the cost of travel and entertainment, amounted to over $175,000.

Harb responded to questions sent by one of Daraj’s partners in the project, BBC Arabic, confirming he had accepted Ericsson’s invitation to Stockholm, and that the costs of travel, accommodation and transportation were on account of the company. 

He also said he did not receive any gifts or privileges from the company. Harb furthermore denied his son Majd was a member of the ministerial team traveling to Stockholm. “Why you suppose he was there in the first place?”

The documents also reveal that Ericsson sales specialist Tony Aboud in 2016 paid for the cost of travel and accommodation for Marwan Hayek. One month later, Alfa announced a deal with Ericsson under the auspices of Minister of Communications Boutros Harb. This indicates the potential impact of this type of travel and gifts in signing deals with the company.

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What Next?

There were always questions about what Alfa was hiding when it reported to the Parliamentary Media and Communications Committee (PMCC). There were always incomplete files and conflicting or hidden information, which hinted at a lack of transparency, and caused suspicion. 

In addition, the PMCC showed there were huge differences in expenditures on developing software systems at Alfa and its fellow telecom operator Touch.  For example, a PMCC report issued in September 2019, noted that Alfa between 2010 and 2017 spent more than $99 million on developing “software”, while Touch’ expenses in the same field, did not exceed $2 million. The difference is huge, which makes one wonder where the money went.

Here lies the importance of the Ericsson documents. They reveal the use of money in making deals and giving priority to personal interests over Alfa’s.  Daraj contacted the media office of the current Telecom Minister Johnny Al-Qarm and informed him of our data. But he preferred not to comment and wait for the data to be published.

We also contacted the current Alfa CEO and Chairman Jad Nassif, who was surprised to hear about the documents and said he would communicate with the company’s legal team to deliberate, stressing that his current management has nothing to do with the cited documents or any investigations related to previous managements. 

We informed him of the fact that there are still employees in Alfa today, who previously received gifts, and asked if this calls for the company to investigate the matter. We also asked him if QTS, owned by Hayek’s wife, was still working with Alfa, despite the apparent previous conflict of interest. According to him, the firm was still installing and dismantling telecom towers.

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