​SCA investigation: No violation of laws or internal policies

Discharge from liability cannot be questioned, but criticism of appropriateness and business-related benefit in the surveyed areas

“We have in our investigation not identified anything that indicates that SCA’s parent company or its representatives have violated applicable law. With respect to the company’s internal policies, they were designed in such a manner that we judge them not to have been broken. This means that there are no grounds for SCA to direct a financial claim against any individual. Thus, the Board´s and CEO’s discharge from liability cannot be questioned,” says Johan Munck.

“The policies have been followed, but our investigation points out that the policy for corporate aviation has been generous. Furthermore, we have a number of comments and views on suitability in the report’s three main areas: corporate aviation, corporate hunting trips and related party questions,” says Svante Forsberg.

On 26 January Svante Forsberg and Johan Munck received the assignment from SCA’s Board to investigate the company’s use of corporate jets, its corporate hunting trips as well as certain relations with related parties within SCA during the period 2010-2014. The investigators’ objective has been that shareholders should receive a fair picture of what has happened and an answer to the question whether there are grounds to direct financial claims against any individuals within SCA.

“Our assignment is now completed. We hope the investigation helps the company’s management in the ongoing confidence-building activities that continue,” says Svante Forsberg.

The investigators have conducted approximately 50 interviews and meetings with leading executives at SCA, but also with individuals outside SCA. They have gone through all the trips with corporate jets during the period 2010-2014 as well as the investments in the larger corporate jets. All of the corporate hunting trips arranged by the Chairman and the CEO, including Medstugan, and the investments in Henvålen and Källberget have been reviewed. Further, the assignments that Sverker Martin-Löf’s son has had directly or indirectly for SCA have been examined.

Corporate Aviation

SCA has operations in 100 countries and among companies with a similarly complex business, corporate air travel is not uncommon. However, the investigators note that the calculations and assumptions that were on-hand in connection with the company’s investments in corporate jets have not been met, with the result that the company had to bear double aircraft costs. The costs for corporate aviation travel total SEK 325 million during the period, which amounts to SEK 180,000 per flying hour, of which SEK 47,000 is variable cost. The investigators note that Östersund has been the destination for approximately every tenth flight.

“The routines for invoicing of trips, primarily relatives, have not functioned satisfactorily during the period covered by our review,” says Svante Forsberg. “However, this applies only to smaller amounts,” he continues.

Corporate Hunting Trips

The investigation shows that the provisions for bribery cannot reasonably be applied, even if the hunting trips were associated with high costs.

The investment in Henvålen amounts to approximately SEK 225 million, whereof SCA’s share is approximately SEK 145 million. The share of internal participants has been high. Further, the investigation points to high expenditures for corporate hunting trips at Medstugan/Henvålen because corporate jets have been used.

Related Party Questions

According to the Companies Act, board members and managing directors cannot act on matters that can entail a conflict of interest.

”These types of question are very sensitive and a high level of transparency is important when it concerns transactions with related parties. Even so, it is very unusual for a company to have a policy regarding related parties. SCA clarified in March 2015 the policy they have had since 2004,” says Johan Munck.

The investigators established that Sverker Martin-Löf’s son’s company has had three different assignments: one for SCA, one for a counter-party to SCA, and one as sub-consultant in the public listing of one of SCA’s partially-owned companies.

The assessment is that Sverker Martin-Löf’s son has a solid background in banking. He is a partner in a financial services company since 2008. The report shows that there is nothing that indicates that Sverker Martin-Löf has contributed to the assignments or that the son has not received the assignments on his own merits. The fees have on all accounts been at market level rates.

”We consider, however, that the CEO, Jan Johansson, should have informed the Board about the assignments without the presence of Sverker Martin-Löf, in light of how sensitive these types of questions are,” says Svante Forsberg.

Svante Forsberg is Chairman at Deloitte and Johan Munck is a lawyer, former Justice and Chairman of the Supreme Court of Sweden

To receive a copy of the entire report, please contact Anita Jonsson, anjonsson@deloitte.se
To contact Svante Forsberg: sforsberg@deloitte.se, 0733-97 22 10
To contact Johan Munck: johan.munck@telia.com, 0707-87 56 65