Swedish telecom giant Ericsson has become embroiled in an international espionage scandal, with five staff now under investigation for passing secrets to a foreign power.

Ericsson suspended two workers on Friday, after three present and former employees were taken into custody earlier in the week.

The firm would not confirm details of the inquiry, only admitting that a breach of secrecy rules and a foreign intelligence service could have been involved.

According to press reports in Stockholm, a Russian diplomat is about to be expelled from Sweden in connection with the case, which may be related to Ericsson's involvement in military communication systems.

Although best known for its mobile phones, Ericsson is a major manufacturer of radar and missile-guidance technology for the Gripen fighter jet.

Boom business

The case is still in its early stages, and no one has yet been charged.

Ericsson makes more than just mobiles

But a Stockholm prosecutor is currently asking a court to extend the detention of the three individuals taken into custody earlier in the week.

According to court documents, all three are suspected of industrial espionage, and their detention is the result of a month-long police surveillance operation.

Industrial espionage is reported to be a boom business, as once mighty state intelligence organisations look for ways to apply their skills after the end of the Cold War.

Europe has complained that the US uses its extensive spy network to mine industrial secrets, and countries of the former Soviet Union are often alleged to be a culprit.

Telecoms firms have been prominent targets: two years ago, an IT consultant to French-owned mobile firm Orange was investigated by Britain's MI5 for spying.