Former Skandia CEO facing criminal charges

Prosecutor Christer van der Kwast has decided to open legal proceedings against the former head of Skandia, Lars-Eric Petersson.

The charges against him are two counts of “breach of trust against a principal”.

According to van der Kwast, Lars-Eric Petersson raised the company’s bonus limits for the year 1998/99 without the approval of the board. That led to at least 185 million kronor too much being paid out to those participating in the company’s Wealthbuilder programme.

In addition, he is accused of taking 37 million kronor more than the board had approved for his pension.

The maximum penalty for such a breach of trust is six years’ imprisonment.

Petersson’s lawyer, Torgny Wetterberg said he is surprised that van der Kwast has chosen to press charges.

“I’m incredulous at his decision. He is taking upon himself a great responsibility,” said Wetterberg to TT.

“In my view he should have written to us about this.”

Wetterberg has spoken to Lars-Eric Petersson about the prosecutor’s decision but declined to say how his client had reacted.

“He’s innocent, what can he say? There’s not really much to comment on.”

Torgny Wetterberg said that he has had very little information about the charges.

“They haven’t sent any papers, I don’t know anything.”

Whether or not other Skandia bosses, notably Ola Ramstedt and Ulf Spång, will also face charges is open to speculation. Van der Kwast is not expected to make a decision on their cases for another month.

Skandia’s chairman, Bernt Magnusson, told TT that he had no comment to make, before promptly hanging up.

The Swedish Shareholders’ Association welcomed the prosecutor’s decision.

“The prosecution is necessary for the ongoing repair work to bring back confidence in the stock market,” said Lars Milberg, senior lawyer at the Swedish Shareholders’ Association.

“You have to show that there is a system of sanctions which deals with transgressions. The next question is what the courts will make of it, but so far the system has been shown to work.”

Perhaps even Lars-Eric Petersson will welcome a court case, noted Milberg.

“It’s good that the prosecutor has now concluded his preliminary investigation and has come to a decision,” wrote Skandia in a statement.

“Skandia has, as previously communicated, begun an arbitration process against Lars-Eric Petersson. Skandia’s compensation demand under civil law agrees largely with that put forward by the prosecutor in the criminal charges.”

A judgement in the compensation process is expected in the first half of 2006, said the company.

TT/The Local

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Scania review board dissects Volkswagen bid

The independent committee looking at Volkswagen's take-over bid of Swedish truck giant Scania began its work on Tuesday, stating promises that headquarters would remain in Sweden were paramount.

Scania review board dissects Volkswagen bid
IF Metall Union representative Johan Järvklo sits on the independent review board. File: TT

Åsa Thunman was appointed chairwoman of the committee, which has invited financial consultants from Deutsche Bank and Morgan Stanley as well as legal advisors from Swedish law firm Mannheimer Swartling to assist them in their appraisal.

Thunman said in a statement that the committee would look at whether the $9.2 billion bid was in the best interest of Scania shareholders.

The effect on Swedish industry would also be considered, underlined committee board member Peter Wallenberg Jr.

"It has noted that Volkswagen does not foresee any significant changes with regards to Scania and that Scania’s headquarters and its development centres will remain where they are today," Wallenberg Jr. said. "These matters are of course of importance to the company and for Sweden.”

At the plant in Södertälje, employees have been busy discussing the bid. Assembly line worker Ahmed told The Local that his colleagues did not fear that production would be relocated to Germany.

"They couldn't possibly move all these machines and equipment," Ahmed, which is not his real name, told The Local on Tuesday. "But everyone on the floor has been discussing the offer."

Volkswagen tabled their $9.2 billion bid to swallow up Scania last Friday. It already owns 89 percent of Scania's voting rights and 62.6 percent of the company, with VW eager to secure the nearly 40 percent they do not own. The takeover has encountered resistance from two of Scania's minority owners, however. Both insurance outfit Skandia and pension fund AP4 have expressed reservations about selling up to Volkswagen.

“Scania’s prerequisites to maintain its leading position are better as a listed company than as a subsidiary in a larger group. Skandia doesn't intend to accept the offer," Caroline af Ugglas, head of equities at Skandia, told Bloomberg over the weekend.

Scania, which was founded in 1891 and has operations in more than 100 countries, boasts 38,600 employees. Around 16,000 work with sales and servicescross the company's subsidiaries, and over 12,000 work in production units. The company has headquarters in the Swedish town of Södertälje, where almost 6,000 employees work. The headquarters also hosts the research and development operations, with 3,300 employees.

"Changing owners won't make any difference to us in the near future," assembly line worker Ahmed said. "But we do wonder if the rules will change later on."