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Tuesday, July 23, 2024

Government gives in to tycoon Røkke

Kjell Inge Røkke, one of Norway’s wealthiest men, may well have popped open a bottle of champagne Monday evening. By most accounts he’s the big winner in a controversial deal that’s left Norway’s socialist government licking its wounds over the sale of five companies in the Aker industrial empire that Røkke controls.

Government officials refused to admit that they’d gotten in over their heads in doing business with the clever and hard-driving Røkke (photo at right). He’d enticed the government to invest heavily in a new Aker company he set up two years ago. The Labour party-led government went along, fearing that to do otherwise might jeopardize jobs in the Aker system.

Critics claimed at the time that the deal amounted to cash support at taxpayer expense for Røkke, and that the government had paid far too much for its stake in the newly formed Aker Holding.

That criticism paled in comparison to what exploded in late March, when it became clear that Røkke had orchestrated the sale of five other Aker companies to Aker Solutions, in which the government holds an indirect stake through its shares in Aker Holding. Aker’s stock plummeted on the news, as the market was clear in its assessment that it was a good deal for Røkke and a bad deal for Aker Solutions’ shareholders.

The government minister from Labour who’s in charge of business matters, Sylvia Brustad, claimed she wasn’t properly informed about the impending deal and that it should have been handled in Aker’s corporate assembly. In early April, as the conflict intensified between Røkke, the state and other minority shareholders in Aker, Brustad claimed she was “furious” and “irritated” with Aker officials.

Røkke ultimately mocked her when he finally took questions at a remarkable press conference in late April. He defended the sales, was furious himself over the criticism he faced and vowed he’d never give up a deal that he believed was right.

In the end, Røkke won over the state. Brustad announced on Monday that the government had accepted both the sales and the price Aker Solutions is paying for the companies, claiming independent evaluations judged them as “not unreasonable.” Never mind that the state’s own adviser, Oslo securities firm Pareto, still believed the sales were overpriced. Brustad refused to admit defeat, noting that the deals would finally be handled in Aker Solutions’ corporate assembly like the state wanted in the first place.

Røkke’s interests have a controlling interest in Aker Solutions, however, so it appears a done deal. Røkke will get his way, and opposition politicians claim Brustad and other government officials did a poor job of protecting taxpayers’ interests. “Completely unprofessional,” sniffed former finance minister Per Kristian Foss of the Conservatives. “Downright embarrassing,” said the head of the right-wing Progress Party, Siv Jensen, with a smile. “The government is left trying to control the damage,” claimed a commentator for Norwegian Broadcasting (NRK).

Prime Minister Jens Stoltenberg, who has mostly managed to stay out of the fray, letting Brustad handle it, tried to put a brave face on the matter Monday evening, but admitted that his government would “try to avoid this happening in the future.”

Røkke stayed out of the spotlight Monday evening. His hired hand Øyvind Eriksen, chief executive of Aker, couldn’t mask his delight over the victory. “Everyone is friends again,” he claimed, referring to state officials as fellow shareholders in Aker. “Aker is grateful for the cooperation it’s now getting from the state.”

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