Vattenfall in political storm

Sunday, November 15, 2009

State owned Vattenfall, one of Europe’s largest power producing companies, has found itself in the middle of a political storm since it became known they had plans to sell their part of the Swedish power grid. Accusations that CEO Lars G. Josefsson has ‘pledged’ the entire corporate group, in an agreement with German authorities, has made the Minister for Enterprise, Maud Olofsson, to put forward strong criticism.

On Tuesday earlier this week TV4 News reported that Vattenfall had plans to sell their part of the Swedish power grid, in order to acquire capital for large investments in British nuclear power.

Vattenfall CEO Lars G. Josefsson was said to be the leading force behind the deal, estimated to be worth around SEK 50 billion, this despite protests from within the Board and the rest of the management.

Executive Vice President Hans von Uthman is said to have opposed the sale. According to TV4 News, it was Uthman’s criticisms that led to him being fired.

Political storm
The political opposition reacted strongly to the report about a possible sale of the Swedish power grid.

Social Democratic spokesperson for Enterprise, Tomas Eneroth, said it to be “unacceptable” because the power grid is “an important part of the infrastructure”. He also put forward that the question must be submitted to the Parliament.

Yesterday Maud Olofsson, Minister for Enterprise, responded at a press conference.

“The recent events at Vattenfall have damaged the publics trust in the company. From an owner-perspective, this is not good”, Maud Olofsson said.

But despite the harsh criticism, she would not say whether she has trust in the CEO Josefsson. On the other hand, she said she trusted the board and that it is up to the board to answer if there is any trust in Josefsson as CEO of the company.

Olofsson confirmed that there had been plans to sell the power grid and invest in British nuclear power. But it was not commercially interesting for Vattenfall to do this, and that it is important to keep ownership of the Swedish power grid. This was also affirmed by the Chairman of the Board, Lars Westerberg.

Also Lars G. Josefsson today affirmed this in a debating article in newspaper Dagens Nyheter.

Is Vattenfall pledged to Germany?
But the political storm accelerated today, with new reports from TV4 News that that CEO Lars G. Josefsson has ‘pledged’ the entire corporate group in an agreement with the German authorities.

TV4 News reports that Lars G. Josefsson has pledged the whole corporate group, since he in June last year signed a document that governs liability for any accidents on the company’s nuclear power plants in Germany.

The government´s special investigator Ingvar Persson, who is behind an investigation into claims of accidents, says that he interprets the agreement as that Vattenfall would become liable if an accident at a German nuclear power plant occurs.

Minister Maud Olofsson said that the government had no information when the contract was concluded.

She says to news agency TT that the government only a few weeks ago learned about the agreement. That the entire corporate group got the unlimited liability for mishaps in Germany, not only the German part of the business, is the result of a corporate reshuffle in 2008, according to her.

The agreement was published on 1 July 2008, when German media also wrote about the deal. The owner of the state with Maud Olofsson in the lead, however, feels deceived.

“We do not want to risk our assets in Sweden over an accident in Germany”, she says.

Germany, unlike Sweden, has laws stipulating that companies operating nuclear power stations are fully liable for damages in any accident.

Josefsson fights back
“There is no pledge, but a completely normal German business contract”, CEO Lars G. Josefsson said to news program Aktuellt in SVT tonight.

Josefsson also argues that TV4 News deliberately want to worry the Swedish public with their slant about a pledge.

In a press release Vattenfall also informs that the nuclear power plants in Germany are insured jointly with other nuclear operators and that the economic responsibility is regulated at multiple levels, where it in practice is thus extremely unlikely that the parent company would be liable.

Posted in |