Former Skandia chairman grilled in court

The start of the trial of the former managing director of Skandia, Lars-Eric Petersson, was delayed by 15 minutes on Tuesday because witness and former chairman Lars Ramqvist was stuck in traffic on his way from Södermanland.

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Looking somewhat ruffled, he charged into the courtroom and was immediately bombarded with questions by prosecutor Christer van der Kwast.

Ramqvist stated categorically that he did not know that some time during 1999 or 2000 the board had decided to raise the ceiling on the company's Wealthbuilder bonus scheme.

"The board took the decision in February 2000 to lengthen the duration of Wealthbuilder and the other bonus programmes until May with unchanged conditions, with a ceiling of 300 million kronor," he said.

On many occasions on Tuesday morning Ramqvist found it difficult to remember certain incidents in 1999 and 2000. Nor did he remember many documents about the discussion surrounding Skandia's bonus programme which van der Kwast referred to.

In May 2000 the Skandia board was informed that the payout for the three extended bonus programmes was preliminarily 800 million kronor. At the beginning of August the board decided to add a cost of 620 million kronor for the schemes to the half year result.

Prosecutor Christer van der Kwast referred to a series of documents showing that in autumn 2000 the management began discussing a new framework for bonus payouts.

"I'm very surprised that just a few days after we set the costs for the bonus programmes in the half year results the management began discussing new models for the programmes," said Lars Ramqvist.

"It's also hard to understand that we in the board did not get any information during the autumn from the management or from the auditors."

Lars Ramqvist emphasised the fact that a board in a listed company is completely dependent upon getting correct information from the management and auditors.

"I think it seems as though Lars Ramqvist and the board were offside when it comes to Petersson and the auditors," said Christer van der Kwast.

"I consider that we on the board were deceived," said Ramqvist.

In May 2000 Lars-Eric Petersson, Ola Ramstedt and Ulf Spång wanted to renegotiate their bonuses under the Wealthbuilder scheme.

Petersson secured a package consisting of options, a pension and a bonus. The board approved the agreement with Petersson in August. It was a good deal, said Ramqvist, with the costs being borne by Skandia's pension fund and not the company.