Corrupt farmer jailed, co-op criticized

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A farmer from Hedmark County has been convicted of swindling the agricultural cooperative of which he was a member, Gartnerhallen, for NOK 45.6 million. He was sentenced to five years in prison and ordered to pay back the money, much of which he spent on luxury automobiles. The co-op, meanwhile, has been criticized for lacking internal control of its finances.

A former chief accountant for Gartnerhallen who was charged with arranging the fraudulent payments to the farmer was also convicted by the Oslo city court (Oslo Tingrett) and sentenced to four years in prison. He was found to have collected around NOK 3.3 million of the money he siphoned off Gartnerhallen’s accounts.

Driven by ‘egosim’ and a ‘lack of empathy’
Both sentences were in line with those requested by state prosecutor Geir Kavlie of Norway’s economic crimes unit Økokrim. Kavlie had referred in court to the farmer, identified by newspaper Dagens Næringsliv (DN) as Ola Smørbol, as “totally lacking empathy” and driven by “egoism.”

Smørbol was charged with having pressured Gartnerhallen’s chief accountant, who was not publicly identified, into paying out the money to him over a period of several years. Both prosecutors and the accountant, who had made a full confession, claimed that the farmer would often call the accountant several times a day, demanding money. After the first transfer was made, with the accountant keeping some of the money for himself to finance racetrack betting and other gambling, the farmer allegedly resorted to blackmail in order to continue the flow of payments.

“Smørbol quickly realized that the accounting chief was a person who gives in to pressure,” Kavlie claimed in court. “This psychological advantage was exploited in a very cynical manner.” The accounting chief himself referred to the farmer’s pressure as “extortion” and “torture.”

The farmer flatly denied pressuring the accountant, claiming all along that the payments were simply “loans” that he received from the co-op for farming operations. During a raid of his property in Hedmark last summer, however, investigators found and seized several luxury vehicles, a race car, a large truck, seven tractors and other evidence of an expensive lifestyle. The farm has since gone into bankruptcy.

‘Advanced manipulation’ of the books
DN reported earlier this week that the agricultural co-op Gartnerhallen itself is  the target of harsh criticism in an investigation carried out by Oslo law firm Wiersholm into how such an extensive fraud could have gone on for so many years. It was described as a case of “advanced manipulation” of the co-op’s books to shield the payments from the co-op’s management and auditors.

Prosecutor Kavlie also noted it was the accounting chief’s fears that his own legal violations would be revealed that prompted him to continue making the payments. They were finally discovered by the co-op’s auditing firm KPMG last year, which led to the accounting chief’s confession. The two men were indicted last fall.

Gartnerhallen’s former chief executive Arnt Foss resigned last summer, in line with a severance agreement signed before the fraud was uncovered. DN reported that he has apologized for the lack of internal control and economic routines that were highlighted in the Wiersholm investigation.

State broadcaster NRK reported Friday that Gartnerhallen decided to sue its auditing firm KPMG just before Easter, for allegedly not fulfilling its duty to monitor Gartnerhallen’s internal control and identify deficiences. Gartnerhallen’s chief executive Elisabeth Morthen claims it was a “shock” to discover the massive fraud.

The chairman of Gartnerhallen’s board, Per Olav Skutle, said the board now has a responsibility to try to recover as much of the money lost in the fraud, out of consideration for the co-op’s other members.

newsinenglish.no/Nina Berglund