The special economic crimes unit of Norway’s state police, Økokrim, was hit by more stinging criticism this week, this time over how it handled a lengthy case of alleged tax avoidance by the world’s largest offshore rig company. The unit charged with investigating everything from fraud to corruption in Norway also faces a political fight over its very future.
“We have seen that we have made some mistakes in a large case,” Økokrim leader Trond Eirik Schea told reporters after a commission appointed by the state prosecutors office (Riksadvokaten) handed over its conclusions of the so-called Transocean case. It involved how a Transocean drilling rig was towed out of position in Norwegian waters in 2000, sold to another Transocean unit and then towed back in a maneuver that significantly cut its tax liability. Økokrim spent years investigating the case and indicted Transocean in 2011, claiming it had wrongly avoided and underpaid more than NOK 11 billion (around USD 2 billion at the time) in taxes.
In 2014, however, the Oslo City Court acquitted all indicted in the Transocean case. Økokrim appealed and the case was supposed to resume in January of last year. Instead, Transocean’s defense attorneys accused Økokrim lead prosecutor, Morten Eriksen, of being a “crusader” in the case and demanded he be removed. Other issues arose related to the objectivity of Økokrim’s investigation, including a disputed budget allocation from the Finance Ministry responsible for the Norwegian tax authority. Eriksen was ultimately taken off the case and then Økokrim dropped its appeal and even issued an extraordinary apology.
That ultimately prompted the state prosecutor’s high authority to order an investigation into Økokrim’s investigation of the Transocean case, and the result delivered on Tuesday was damning. Not only was Eriksen criticized, but Økokrim’s management was, too, for for leaving him mostly alone with the Transocean case. The commission’s report cited a lack of management follow-up and control over the case, along with failing to monitor its progress and the huge amount of time (more than 12 years) it took to proceed. The commission criticized Økokrim’s cooperation with the tax authorities, a lack of tax knowledge, high turnover among those working on the Transocean investigation and an “unfortunate” blending of roles between Økokrim and the tax authorities.
Eriksen has defended himself and won support from colleagues who claim he became a scapegoat in the case and was left adrift by top Økokrim mangement. Newspaper Dagens Næringsliv (DN), which has followed the Transocean case closely over the years, reported on Wednesday that Økokrim boss Schea had also effectively meddled in who would lead the commission, with law professor Jon Petter Rui telling DN he withdrew as the commission’s leader after Schea had questioned his own objectivity and neutrality.
None of the fallout from the Transocean case has been good for Økokrim’s longevity prospects. Some politicians and the Norwegian police’s Særorganutvalget, a commission charged with reviewing the functions and capacity of the state police department’s various units, are keen to reorganize Økokrim’s operations. The police commission has proposed dissolving Økokrim as a separate entity and merging it with Kripos, the state crime investigatory unit.
That’s set off political debate, with newspaper Aftenposten editorializing on Wednesday that Økokrim should continue as a special unit probing complex cases of financial and economic crime. State Prosecutor Tor-Aksel Busch told DN that he’s worried the Transocean case can affect Økokrim’s future and survival, but noted that “we have a tendency to forget that Økokrim was created as a result of poor results of earlier economic crime investigations.” Økokrim is supposed to possess special expertise and has launched and successfully prosecuted many corruption, tax evasion and other cases of economic crime over the years.
Busch told DN he still had confidence in Schea. “He wants to do and, in my opinion, has already done a lot to quality-check Økokrim’s work,” Busch said. “He should have used more time on this concrete case and less on general quality assurance, but that doesn’t mean I don’t have confidence in him.”
The commission’s findings on the Transocean case will now be sent out to hearing, while the future of Økokrim will likely be left to a political debate within the Justice Ministry and the Parliament.