Pension Deal Causes Political Storm in Sweden

April 1, 2009 Updated: April 1, 2009

STOCKHOLM—One of Sweden's leading pension funds, AMF, is under investigation by independent auditors. AMF is owned in part by the Swedish labour union, LO.

In question at AMF is former CEO Christer Elmehagen’s pension deal, which grants him in excess of 60 million Swedish crowns (over US$ 8 million). He is also accused of having made a further 20 million crowns through unethical means.

Another major focus of the affair is Mrs. Wanja Lundby-Wedin, chairman of LO, Sweden’s biggest labour organization. LO consists of 15 unions and is responsible for organizing some 1 700 000 workers in a country of 9 million. Labour unions have traditionally been very powerful and well-organized in Sweden. LO has also always had close ties to the Swedish Social Democratic Party (SAP), which has governed the country for the better part of the past century, but is currently out of office.

Mrs. Lundby-Wedin was on the board for AMF when they granted Christer Elmehagen his generous pension deal. She claims she was misled, however, and wasn't aware the specifics. On March 29 she announced that she intends to stay on the board for AMF, despite the fact that many political commentators demand the whole board resign. The board of LO announced that they continue to trust her as chairman on March 30.

There are several reasons this series of events has caused resentment in the country. Pension deals, bonuses, and salaries of CEO's of private companies have been hot topics for several years, and labour unions have been among the most outspoken critics. With the economic crisis, senior citizens also recently had their pensions reduced. Political pundits now question whether Mrs. Lundby-Wedin will be able to carry on as chairman of LO for much longer, especially with the upcoming election in 2010, where SAP hopes to regain power.

Christer Elmehagen, who also has been a strong critic of outlandish remuneration, has declared himself willing to discuss repayment of the 20 million crowns. He also told the Swedish news show, Rapport, on March 30, that with regard to his 60 million crown pension, “The conditions of my deals are perfectly clear. The responsibility lies with the board.”