The chairman of Swedish insurer and pensions group Skandia resigned yesterday after a report disclosed that senior executives had misled the board and auditors, collected excessive bonuses and made shareholders pay for private apartments.Chairman Bengt Braun, who took over earlier this year, has stepped down in favour of Bjorn Bjornsson, who joined the board in April. All of the executives implicated have already left the company.
The independent report, commissioned by Skandia, did not put blame on Braun. However, he was a member of the board from 1989 to 2001, the period during which the problems cited in the report took place. Braun said it was clear the board had been misled.
The investigation found that a few senior managers had “conducted acts that are unsuitable, unethical, and in some cases probably illegal”, and that there were also shortcomings in auditing, Skandia said in a statement. The firm said it would direct claims for damages against former Chief Executive Lars-Eric Petersson — removed in April — as well as former Chief Financial Officer Ulf Spang and Ola Ramstedt, who headed the life insurance arm Skandia Liv.
Sweden’s chief prosecutor, Christer van der Kwast, said he also would start a public probe into the affairs of Petersson and Spang. Petersson caused about Skr 550 million worth of losses to Skandia by removing, without the board’s approval, a cap on options programmes for management, the report said.
Petersson said in a statement to news agency TT he did not consider lawyer Otto Rydbeck, who wrote the report together with accountant Goran Tidstrom, as impartial and that the auditors and Braun had accepted the terms of his incentives.
The investigators said Spang and Ramstedt as well as their family members had been given apartments by Skandia Liv and had them renovated at the expense of shareholders. They also said that Skandia’s chairman at the time, Lars Ramqvist, requested an apartment for himself and his son and that Petersson and Ramstedt arranged flats for them.
Braun said the report had upset him. “It was clear to me that boards in the past have been led in the wrong way. We made one decision, and the management went and did something else,” he told Reuters in a telephone interview. “It is much better for the company to have a chairman who has nothing to do with the past in Skandia, so that it can talk about the future and not just defend the past,” he said. Skandia also said the work of the board at Skandia Liv had been sub-standard up until summer 2002, and that Jan Carendi, Skandia Liv’s chairman at the time, was the main culprit. The company said it was investigating whether it could direct claims for mismanagement against Carendi, too. The board has called an extraordinary shareholders meeting on January 28. Major stakeholders have said the rest of the board should resign too. The investigators also looked into whether there had been wrongdoings in Skandia’s sale of its asset management arm to Den norske Bank (DNB.OL:) but found no evidence of this. It approved of the current board’s work and bonus programme. It did not look into American Skandia, which was sold to Prudential Financial Inc (PRU.N:) in late 2002.