SWEDEN - AP6, one of the Swedish national pension buffer funds, has been rocked by a scandal involving a company, Xeratech, held in its portfolio. AP6 has accused the two founding brothers of "plundering" the company and is now also considering taking legal action against the firm's auditors, Ernst & Young.

Ulf Lindquist, spokesman for AP6, said he was unwilling to reveal how much money the fund has been lost in the debacle but said it threatens the company's existence.

According to Lindquist, suspicions against Xeratech were raised in the autumn when questions posted by AP6 about its balance sheet remained unanswered. He also argued a pattern of concerns was not apparent until later but AP6 alleges it was a systematic set-up by the founders.

The scandal is unravelling minute by minute in the Swedish media with accusations and counter accusations. Xeratech founders have publicly denied any wrongdoing as has Ernst & Young, but neither party was available for comment to IPE at the time of publication.

To complicate matters further, Erling Gustafsson, chief executive of AP6, has been in a relationship with Åsa Rödén, the chief executive of Xeratech, for the past seven years. She was appointed CEO in 2008 with approval from the AP6 board and the founders of Xeratech.

AP6 began investing in Xeratech in 2007 and owns a 35 % stake in the IT company, which specialises in information management and provides solutions for processing digital documents.
 
Lennart Jeansson, chairman of the AP6 board, claimed it is thanks to Rödén that some of the discrepancies at Xeratech were discovered and said much has been saved because of her.

Jeansson said he took the decision to back her appointment without any interference from Erling Gustafsson, adding Rödén was the most qualified for the job.

However, AP6's spokesman, Lindquist, was critical of how Rödén's appointment was handled and argued in hindsight it was "stupid and wrong" because he believes any relationships should be strictly business.

To further add to the troubles engulfing AP6, CEO Gustafsson earlier hinted in the Swedish media that AP6 is having trouble with other investments where he believes there could be ‘irregularities', although he declined to name names.

AP6 is different to the other national pension funds in that it only invests in Swedish private equity and focuses on small to medium-sized companies. It currently manages approximately SEK16.4bn (bn) in assets and invest in 350 companies as well as being a direct investor in 50 firms.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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