Board seats in Gothenburg’s municipality owned enterprises (MOEs) are handed out to people as rewards for party loyalty. A new investigation reveals that the selection process is shadowy and undemocratic. As a result, citizens cannot hold board members accountable for their actions and are left in the dark about how their city is governed. This hidden web stands right behind the politicians that citizens voted for in September.
TEXT: Amanda Xiang, Anna Hallgren, Anne Ruth den Hertog, Kelsey Lescop, Khorrambanoo Askari
– There are not any requirements that are asked in the selection process to become a board member. The only requirement is loyalty, says Thomas Hedberg, chairman of Demokraterna (D).
It was in the 1990’s that Gothenburg decided to reorganize the city and started to invest in MOEs. Since then, Gothenburg’s investments have increased exponentially. There are currently 94 MOEs, while in comparison, Stockholm has only 17. Andreas Bergh, a political- economic researcher, has published academic papers on the topic.
– What we identified in our research is that when you have a high number of MOEs, you are also more likely to have a very complex structure, which is hard to scrutinize by the political opposition, journalists, and citizens. Which means that it is hard to tell who is responsible for every decision, says Bergh.
Göteborg Stadshus AB is the parent company, with 93 subsidiaries which operate in different sectors, including energy, housing, infrastructure and tourism. The municipality invests in these companies, which makes Gothenburg’s citizens the shareholders.
– We pay the political side enormous amounts of money in taxes, but we don’t evaluate if they are doing a good job or not, says Hedberg.
It’s been 12 years since Uppdrag Granskning conducted an investigation on MOEs in Gothenburg that led to several convictions of MOE employees for bribery and corruption. After that scandal, there were hopes that the MOEs would have improved their board selections to focus on competence and democratic values.
Instead, current and former members of several parties describe a murky and undemocratic process for choosing nominees. The approach varies among parties, but one theme remains consistent: board seats are awarded to members in recognition of loyal service.
Once the party selects its nominees, the municipal council confirms the appointments, but according to Dan Oraham, Socialdemokraterna (S), a substitute board member at Liseberg, the votes are ”mostly just unilateral. They [the city council] just say yes.”
Adam Cwejman, political editor at Göteborgs-Posten and former member of Liberalerna (L) described the selection process as seeking “to thank members for long and trusted service.” That is, appointees to the boards are not selected for having relevant experience or competences, but rather as a function of their status in the party.
– The idea of having MOEs is that you should be able to take an area and have it run with expertise, says Bergh.
This approach towards selection creates boards that are at best uneven and at worst, completely unqualified to oversee the municipal companies. Some of these companies have revenues running into the billions of kronor and directly touch the lives of city residents. For example, Förvaltnings AB Framtiden, is one of the largest real estate companies in Scandinavia with over 75,000 units and 200,000 tenants.
One board member on Framtiden was recently elected to the Riksdag and is vice-chairwoman of Socialdemokraterna in Gothenburg. Her impressive political career does not, however, explain what competences she brings to the oversight of a large and complex company like Framtiden.
In fact, another board member at Framtiden who prefers to remain anonymous, said that the political orientation of the boards often leads to hours being spent on minor issues that have a political angle. Board members make decisions that benefit their own party, meanwhile the important but rather technical and unglamourous aspects of business are ignored.
The result of having board members with no expertise or knowledge is that it becomes easier for a few people on top of the boards to control decision making, which according to Bergh, is problematic. He says that if people on top of the boards have access to more information, it makes it easier for the CEO to control the company without meaningful oversight.
– So, you’re basically “rubber stamping” whatever management tells you to. You’re very rarely going against what management suggests because they have more information and more knowledge about what’s going on, says Cwejman (L).
What makes it more alarming is that both the selection process and functioning of the boards are far away from the public eye. This complex web of boards and companies makes it nearly impossible for the average citizen to get to know the leaders of these massive corporations that control huge swaths of the city’s economy, or hold them to account.
Wow! What an amazing investigation! Definitely derves a “Pass with Distinction”!