When Swedish telecommunications company Telia issued an announcement of its new commitment to sustainable business practices, the shift in strategic priority renewed shareholder trust.

At the end of 2016, Stockholm-based Telia Co. AB — a telecommunications company with more than $9.6 billion in revenues (2016) and 21,000 employees — was recovering from a five-year-old bribery scandal that ultimately resulted in $965 million in fines, the resignation of the company’s CEO, the removal of board members, shareholder divestments, and lost public trust.

As the company finalized its latest annual report, Telia’s CEO Johan Dennelind was deciding whether to recommend to the board of directors that they include a bold statement about the company’s ongoing commitment to sustainable business practices. Such a statement had been made by only one other company in the world. It was not immediately clear whether the risks of including such a statement were worth the reward.

The Scandal

In 2012, investigative journalists in Sweden alleged that Telia had paid bribes to the daughter of the president of Uzbekistan to secure a license to operate in that country. After receiving heavy criticism in the media and from its owners and the general public, Telia called on local law firm Mannheimer Swartling to determine the truth behind the journalists’ allegations. While the review did not conclude that bribery had taken place, it did conclude that the company’s own ethical guidelines had been violated.

The CEO resigned the day the review was presented, and a few months later, most of the board of directors was replaced. Several senior executives, including the CFO, former acting CEO, and the former head of the Eurasia business unit, were dismissed in the following months. Lack of confidence in the company’s risk management led to several large Swedish owners divesting, and removing the company from various ethical mutual funds.

Initial Steps to Recovery

In September 2013, a new management team led by Dennelind (previously at Vodacom Group Ltd.) was brought in. After an extensive strategic review, the company decided to exit its business in Eurasia and focus its operations in the Nordic and Baltic regions.

“It is our belief that it is possible to do business in Eurasia, which is both profitable and sustainable — but it is important to enter markets in a correct way,” says Dennelind. Reflecting on mistakes made in Eurasia, he states that, “This was not surprising given how the company was managed in the past. There was no compliance officer nor ‘speak-up-line.

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