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Scandinavia has long prided itself on its immaculate corporate culture. Business is conducted by consensus, and greed is publicly frowned upon. But a series of scandals at some of the region's best-known companies has severely tarnished that image. Back in September, three top executives resigned from Norway's state oil company Statoil for their alleged part in arranging a $15 million "consulting contract" that police fear was used to bribe Iranian officials. Since early last year, Sweden's economic police have been investigating reports that some of the 421 store managers at Systembolaget, the country's state-owned liquor store monopoly, received bribes from liquor wholesalers to promote certain products.

Now the threat of disgrace has descended upon insurance-giant Skandia. Three of the firm's departed executives — former CEO Lars-Eric Petersson, former chief financial officer Ulf Spång and the former chief of life insurer Skandia Liv, Ola Ramstedt — are under investigation for misusing corporate assets, says Stockholm police spokesman Ulf Göranzon. None of the three former executives — Petersson was fired in April 2003 before the scandal broke because of the company's poor performance, Ramstedt and Spång as the scandal was emerging — has been formally charged, and they all deny any wrongdoing. But Scandinavians are nevertheless asking themselves if their model corporate culture is going the way of Enron and Parmalat.

The countries can barely accept the notion. "We thought that corruption might happen in Germany or the United States, but never here," says Per Bill, a Member of the Swedish Parliament. Confidence in big business in Sweden has fallen from 60% in 1995 to just 28% last year, according to Swedish pollster SIFO. "There is a severe crisis in public confidence in the business sector," says Erik Asbrink, who heads a five-member commission appointed by the Swedish government to restore trust. Skandia is an especially severe psychological blow. The $4.7 billion firm is the largest insurer in the Nordic area and the oldest listed company on the Stockholm exchange. In 1999, Petersson was chosen by Veckans Affärer, a Swedish weekly business magazine, as the best CEO in Sweden. Now he's facing two serious allegations: that the three executives spent nearly $1 million of company money renovating luxury apartments, passing the charge on as repairs to the corporate headquarters; Petersson and Spång are also being investigated for taking $42 million in bonus payments that allegedly weren't authorized by the board of directors. The story took on a grim tone when Jan Wangärd, a Skandia executive who reportedly benefited from the controversial bonus program, hung himself in a Stockholm hotel. Petersson has been questioned twice by police, most recently last week. "The accusations are false," says Christer Brantheim, a lawyer for Petersson. Mats Willman, lawyer for Spång, calls the charges "false and untrue."

No matter how the case turns out, the scandal is likely to have a lasting impact on the way Sweden does business — and the way Swedes regard executives. "It will mean more control, and more auditing, especially when it comes to bonuses and share options," says Lars-Erik Forsgårdh, managing director of the Swedish Shareholders' Association. Asbrink, who heads the Swedish trust commission, says: "We have to increase transparency and sanctions for breaking the rules." Among his proposals: more jail time for lawbreaking executives and heavier fines. You can't legislate against greed. But those tougher penalties should go a long way toward rebuilding trust among Scandinavians.

• CHARLES P. WALLACE | Stockholm
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