Billionaire Erik Paulsson is one of half a dozen defendants standing trial charged with aggravated bribery in connection with the building of the soon-to be ready national football Arena (Swedbank Arena) in Solna. A ruling is expected within the next several months.
Mr. Paulsson together with his brother Mats Paulsson is the founder of Peab AB (OMX: PEAB B) aka Paulsson Entreprenad Aktiebolag. Together the brothers and the Paulsson family still have a clear majority of votes as one A-share gives 10 votes.
Peab was contracted in 2009 to build the arena for 2.2 billion SEK and also received contracts for adjacent roads and infrastructure worth around 1 billion and for new offices in area worth over 850 million. The project was the largest in company history. In late December 2011 Peab won a 3.5 billion order to build the largest shopping centre in Scandinavia dubbed the Mall of Scandinavia next to the Swedbank Arena. The entire Arenastaden plan is the largest development project in Sweden.
Another defendant Anders Elfner is former deputy CEO of Peab. Company personnel and now former Solna Mayor Lars-Erik Salminen are being accused of giving city Manager and CEO Sune Reinhold nearly a million kronor in bribes. In total four of the company representatives stand trial for gross corruption. The defendants maintain their innocence and expect the trial to clear their name. Mall of Scandinavia contract award became the swansong for Salminen at the healm as Pehr Granfalk replaced him at the turn of the year.
Public sector construction projects are in important part of Peab’s annual revenues. Newspaper Dagens Industri highlighted a difficult situation that might arise if the defendants were found quilty. Should Paulsson is particular be considered a company representative; public tender laws might exclude Peab from bidding. The company spokesman however said they are not worried in the slightest that this might happen for various reasons.
In 2011 Peab had operative net sales of over 44 billion and operating profit just below 1.5 billion. Earnings per share were down to 3.26 and orders during the year climbed 9% to 38 billion. The company aims to be the obvious partner in community building in the Nordic region. For 2011 the Board of Directors is proposing a dividend cut of nearly 20% down to 2.10 SEK per share.
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