Johan Grönberg, 1930-1932
Johan Grönberg, 1887-1974
A difficult task faced Johan Grönberg when he took over as president of Ericsson in September 1930. Grönberg's time as president was also very short - just two years. He remained with the company for 30 years, however, serving until 1958.
Johan Grönberg was a president who valued loyalty highly both towards the company and towards the board of directors with whom he had a good working relationship. At this time, however, it was the finance man Ivar Kreuger who thanks to his substantial shareholding controlled the deals that were made, withholding information needed to take the right decisions not only for Grönberg, but even for the Ericsson board. A contract was signed, for example, between Ericsson and the holding company Kreuger & Toll to finance a loan that Kreuger had taken. The contract was entered in November 1930, but the board did not receive any information until September the following year.
Although it was Kreuger who chose Grönberg as president - he had previously been the director for the match monopoly in Romania - Grönberg was primarily loyal towards Ericsson, not Kreuger. Kreuger, however, played by his own rules. On several occasions, he used Ericsson to bankroll the operations of his own company, Kreuger & Toll. In 1931, Grönberg demanded guarantees for one of Ericsson's loans totaling USD five million. After some bickering, he received as a guarantee a part of Kreuger & Toll's shareholdings and accounts receivable, assets that would soon prove to be of limited value.
Not only Grönberg, but also the media were misled by Kreuger. The papers wrote very positively about Ericsson's alliance with International Telegraph and Telephone Corporation (ITT) that Kreuger had pushed through in 1931. In reality, Kreuger had sold a majority of the voting rights in Ericsson to its competitor to obtain liquid funds for his own purposes. Grönberg knew about the alliance, but not its true scope and purpose.
Convinced that he was strengthening Ericsson's position and contributing equity to the company, Grönberg implemented a number of financial transactions between Kreuger & Toll and Ericsson at Kreuger's request. But by year-end 1931, it became apparent that Ericsson had a claim on the Kreuger group amounting to SEK 65 million.
Grönberg asserted that Ericsson's liquidity crisis was primarily the result of commitments made in 1929 and 1930 when foreign operations were expanding but that the previous management could not be blamed, since they had based their decisions on misleading information provided by Kreuger.
In September 1932, six months after Kreuger's death, Johan Grönberg was asked to step down as president, a demand that was made by Marcus Wallenberg in exchange for his bank (Stockholms Enskilda Bank) helping Ericsson. Ericsson's board of directors expressed regret that Grönberg had been "made a victim of circumstances that no one had been able to foresee or influence", and Hemming Johansson, one of Grönberg's predecessors as Ericsson president, expressed his opinion that the company's management would "lose a skilled, intelligent and wise person." After leaving his post as president in early 1933, Grönberg worked for Ericsson in France, later becoming president of L M Ericsson's cash register company.
Contribute to this story