Today’s guest post is from Aiysha Varraich, a Ph.D. candidate at the University of Gothenburg’s Quality of Government Institute.
This past January, Transparency International released the latest version of its Corruption Perceptions Index (CPI). And once again, Sweden’s score was among the best in the world (tied for third place with Finland, Switzerland, and Singapore). Sweden’s position near the top of this and other international integrity and good governance indexes may create the impression that Sweden is a corruption-free country. But this is misleading. To be sure, Sweden is free from the daily petty corruption that burdens so many citizens throughout the developing world. But high-level corruption and associated financial crimes are alive and well in Sweden — and often the perpetrators escape meaningful accountability. Consider just a few recent high-profile examples:
- Over a decade ago, investigative journalists uncovered a massive bribery scandal in Gothenburg, where civil servants had engaged in a web of bribery exchanges with private contractors over many years. However, despite the prosecution of the civil servants, none of them was punished, due to lack of sufficient evidence.
- Two years ago, Swedish courts refused to punish Telia executives for their role in a foreign bribery scandal, despite the fact that the company had admitted guilt in settling the case with the U.S. Department of Justice and paid $965 million dollars in penalties. Even though the company had admitted guilt, the Swedish courts held that there was insufficient evidence to convict the executives.
- In the latest corruption scandal to afflict Sweden, executives at one of its largest banks, Swedbank, were involved in a widely reported money laundering case in which fifty high profile bank customers, including heads of governments, laundered approximately $10.2 billion dollars through the bank over a ten-year span. The bank itself was fined a stunning 4 billion SEK (roughly 480 million USD) by the country’s financial watchdog. However, despite this historic fine (the largest imposed on a company in Sweden to date), and a recommendation by the Swedish Shareholders Association to pursue legal action and seek damages against the executives, none of the responsible executives has been held accountable, either criminally or civilly. According to the head of Swedbank, the main reason that the company is not pursuing legal remedies against the executives is that doing would require “too much time and too many resources,”. He also added that under Swedish law there was not sufficient evidence to hold those individuals accountable.
The above examples, among others, underline serious deficiencies in Swedish anticorruption law. Indeed, some critics—such as the financier Bill Browder—claim that Sweden is all talk but no action when it comes to fighting corruption and money laundering within its own borders, or perpetrated by its companies abroad. And the critics have a point. The Telia and Swedbank cases highlight the difficulties of satisfying Swedish courts’ evidentiary standards even when responsibility is clear. More generally, the Swedish legal framework makes it far too difficult to hold individuals, especially high-level decision-makers, accountable for their involvement in significant wrongdoing.
There is thus an urgent need for Sweden to revise its laws and policies, in order to ensure that the individuals responsible for engaging in or facilitating high-level corruption are held accountable, because corrupt acts, after all, are carried out by, and with the complicity of, individuals in high-ranking positions. Sweden’s position among the top of various international integrity indexes is no excuse for complacency. After all, Sweden maintains a high quality of government – with exemplary public services of education, healthcare, and law enforcement – in part because of the high levels of trust that citizens place in the country’s institutions and legal processes. This trust enables the social contract between the Swedish state and its citizens. It is imperative to underscore that trust is an evolving part of a society’s social norms, and is affected by how the state and its institutions operate, such as pursuing legal action against corrupt actors. If institutions do not pursue corrective action this trust will also be affected, and ultimately, the way citizens perceive their role in reciprocating their social contract with the state will be altered. If Swedish citizens start feeling that the law is not exercised impartially – with ordinary citizens expected to behave honestly, but high-level executives and power holders able to escape accountability – this trust will gradually erode, thus weakening the social contract that is the foundation of Sweden’s well-functioning polity.