Heads are rolling at Oslo’s City Hall, after months of scandal along with a loss of voter support for the Labour Party that leads the city’s government. The scandal is over how the city’s Boligbygg division paid inflated prices for housing units, while voters are upset over everything from Labour’s new property tax to its anti-car policies and, more recently, how the city is allocating funding for schools.
Raymond Johansen, the top Labour Party politician who has headed Oslo’s city government for the past two years, clearly had to act. In a major personnel change just before the Christmas holidays, Johansen replaced his most high-profile city government colleague and oversaw a job swap between two others.
Johansen replaced Geir Lippestad, the attorney who sprang to international fame for defending bomber and mass murderer Anders Behring Breivik, with Labour Party veteran Kjetil Lund as head of business matters for the city. Those matters include how the city’s Boligbygg real estate acquisitions division has spent hundreds of millions of tax kroner buying up apartments outside the open market, many of them at wildly inflated prices that allowed serial bankruptcy filers to pocket huge gains.
The highly questionable transactions, documented in a long and ongoing series of articles in newspaper Dagens Næringsliv (DN), were made without standard appraisals and have set off several official investigations. One of them, results of which were released last week, flunked Boligbygg’s routines and risk assessments in 16 of 27 areas. Criminal charges have been filed against two men directly involved in the sales and purchases, Boligbygg’s board of directors has already been replaced and Boligbygg’s chief Jan Carlsen resigned last week.
It should come as no surprise that the city’s top politician in charge of the scandal-ridden division charged with acquiring more public housing units for people in need would need to resign as well. Yet it did, with many Labour Party faithful and politicians in opposition unprepared for Johansen’s sudden announcement on Tuesday. Lippestad was one of Labour’s stars in Oslo’s city government, and Lippestad had said himself when he was appointed to his top post back in 2015 that he really wanted to be a politician instead of an attorney for the rest of his life, and be remembered for his politics.
Now he’ll likely be most remembered not only for defending Breivik but also for the Boligbygg scandal that played out mostly during his watch. “I see a clear connection between Lippestad being replaced and the crazy use of money on housing purchases way over market price,” Eirik Lae Solberg, head of the Conservatives’ City Council group, told newspaper Aftenposten on Wednesday.
Lippestad himself said he’d considered resigning even before DN started exposing in October what had been going on at Boligbygg, and before the first person involved was charged by police. “I have evaluated what’s right for me in the long term,” Lippestad said. He conceded to DN itself, however, that he thought the newspaper had done “a great job” in exposing operations at Boligbygg. Now he thinks the various investigations underway need to proceed while he’ll return to his law practice and continue as a member of City Council for Labour and as director of the Labour-backed think tank Agenda.
Johansen confirmed that Lippestad asked to resign when the Boligbygg scandal first hit. “At that time the situation around Boligbygg was unclear,” Johansen said. “I thought it would be good if he could contribute to handing the situation for a while longer and he accepted that. Now (Boligbygg’s) board has been replaced, and a new leader has been hired. It has the best conditions moving forward, and based on that, I agreed to Lippestad’s wishes (to resign).”
Lund, the Labour veteran who’ll now take over for Lippestad, has served as adviser to former Labour Prime Minister Jens Stoltenberg and worked as a state secretary in the finance ministry during the first term of Stoltenberg’s government. Lund most recently has held a top post at the state-owned power supplier Statkraft and been chairman of Ruter, the metropolitan transit authority in the Oslo area. He’s viewed as generally well-suited for the job of trying to restore public confidence.
Solberg of the Conservatives said he could understand that Johansen wanted to make changes all around the scandal-plagued housing operation and, suspect other commentators, dampen Lippestad’s abrupt departure with two more personnel changes within in his city government. Both of them are also tied to operations that have come under criticism from unhappy voters.
Tone Tellevik Dahl, the Labour politician who’s been in charge of Oslo’s schools, was replaced by Inga Marte Thorkildsen, the Socialist Left party’s only politician in city government who has been in charge of nursing homes and other programs for the elderly. Dahl is currently facing an uproar over her decision to move funding away from schools on Oslo’s affluent west side to those on the more working class east side. Now she’ll take over Thorkildsen’s duties as eldrebyråd, while Labour can pass responsibility for Oslo’s schools over to the Socialist Left party.
Johansen remains accountable, though, and continues to face harsh criticism over the Boligbygg scandal. “It’s not over by any means,” Øystein Sundelin, the Conservatives’ deputy leader of the Oslo City Council’s finance committee, told newspaper DN. “We still have all the investigations going on and a hearing ahead of us, and (Labour’s) city government still has a lot to answer for.”
More trouble for Labour ahead
Johansen, meanwhile, also faces voter flight and unrest within his own Labour Party in Oslo. The city government sparked anger and lost voter support right after it assumed power when it imposed Oslo’s highly disputed property tax and then launched various means (along with SV and the Greens Party) of trying to restrict vehicular traffic in and through central Oslo. A new public opinion poll shows that now backfiring even in Johansen’s home district of Groruddalen on Oslo’s east side. While they’ve largely been spared the financial burden of property tax and disappearance of street parking for example, many still rely on their cars to get around town. That’s suddenly become much more difficult and expensive because of higher tolls and parking fees.
Johansen and his Labour Party colleagues thus face myriad challenges if they hope to hang onto power after the next election in 2019. Not only will the non-socialist parties be clamouring to take over, Labour has lost voters to SV, the Greens and the Reds, not unlike what’s happening at the national level as well.