HQ board cleared over bank’s collapse: audit

The board of embattled Swedish financial concern HQ, helmed by CEO Mats Qviberg, was cleared on Friday of all liability regarding the company's collapse following an audit.

HQ board cleared over bank's collapse: audit

The news lifted shares by slightly more than 38 percent just after noon local time.

However, the former CEO, board, auditor and trading director of HQ Bank were found to have failed in their obligations to the company and their inaction may result in legal grounds for seeking damages, lawyer Anders Malm, who was commissioned by the previous owner of HQ Bank to investigate irregularities at the bank, announced on Friday.

“The investigation has found that there may be a legal basis for demanding compensation from one or more of the people currently mentioned,” HQ wrote in a statement on Friday.

According to the audit reports, substantial trading losses at HQ Bank were made possible because positions were valued based on a model “that was not appropriate and opened up opportunities for manipulation.”

Moreover, trade “was not kept in check by appropriate risk limits or monitored by appropriate risk measure,” wrote HQ.

Malm believes that these deficiencies were exploited by the responsible traders without catching the attention of the risk department, senior management, board or external auditors.

As a result, HQ Bank was forced to liquidate its trading portfolio “under very unfavourable conditions.” HQ notified the police about the former trading director earlier this month and filed a complaint about accounting firm KPMG’s services.

At the same time, the trading director has launched a fierce attack against his former employer. He considers himself the victim of a smear campaign and considers the police notification baseless, both Dagens Nyheter and Svenska Dagbladet wrote on Friday.

The Financial Supervisory Authority (Finansinspektionen) revoked HQ Bank’s licence on August 28th, claiming that risky securities deals carried out by the bank’s trading department threatened its survival.

On August 30th, the bank was put into involuntary liquidation and was purchased by Carnegie on September 3rd, the same day the Swedish Economic Crime Authority (Ekobrottsmyndigheten) launched an investigation into suspected fraud and accounting crimes.

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HQ scandal splits Swedish business duo

Sven Hagströmer and his long-term business partner Mats Qviberg have announced that their holding firm Öresund is to be divided in the wake of a scandal involving the now defunct HQ bank.

HQ scandal splits Swedish business duo

“It took 30 seconds. We met on August 31st and after five minutes, we were basically agreed on what we wanted to do. We have been working with this deal since then,” Mats Qviberg said to the TT news agency.

According to the proposal Qviberg will assemble his holdings in a new Öresund with Fabege, Bilia and Skistar among the large posts.

Hagströmer will meanwhile shift his holdings into a new company, Newco, which will initially be listed on the Stockholm stock exchange’s First North index.

In a statement on Wednesday Öresund explain that the developments at subsidiary HQ worked as a “catalyst” for then Hagströmer and Qviberg decided on the split.

HQ Bank, which managed around 60 billion kronor ($9.4 billion) from some 20,000 depositors, was taken over by its competitor Carnegie for 268 million kronor in September 2010 after authorities revoked its licences and forced it into liquidation.

The bank’s former parent company HQ AB, which is the only independent part of the company remaining, announced in February it planned to propose “that compensation to the company be demanded from former board members, the chief executive and the accountant (KPMG)”.

The Swedish anti-fraud authorities are furthermore pursuing an investigation into the collapse of HQ Bank.

When asked by TT whether they remained good friends, Qviberg replied:

“Very, we are sitting here opposite one another, we live as neighbours in the mountains, and have a nice time together.”

But Sven Hagströmer told the business daily Dagens Industri in an interview that the pair would no longer be sharing an office.

The pair emphasised that the decision was taken together and that the alternative of closing the firm had been discussed, and dismissed after the tax consequences were taken into account.

The stock market received the news of the company division positively and Öresund shares climbed 5 percent during the early trading on Wednesday.