The leader of Norway’s national security authority NSM has already quit, and now the future of the country’s justice minister is in question after the two have landed in conflict over an illegal loan taken up by NSM that’s now costing NOK 200 million. Some legal experts don’t think Justice Minister Emilie Enger Mehl will survive this latest government scandal.
“I understand very well that the Parliament may want to launch a vote of no confidence (in Mehl) over this, and I really wonder she’ll still be justice minister a few months from now,” Mads Andenæs, a law profession at the University of Oslo, told Norwegian Broadcasting (NRK). “I can’t imagine how the justice minister can survive this.”
That’s because Norway has a long tradition of holding government ministers ultimately responsible for everything that happens within their ministries, also when they’re not directly involved. In this case, NSM is part of the ministry that’s responsible for both justice and preparedness issues in Norway, and charged with preventative national security measures in both the civilian and military sectors.
Last year NSM took over new office space in a building at Fornebu owned by the private real estate firm Norwegian Property, in turn owned by Norwegian billionaire John Fredriksen. NSM, which needed to modify the office space to suit its needs, ended up borrowing a total of around NOK 200 million from Norwegian Property at high interest rates to cover the costs of security adaptations, updating of its equipment and furnishings.
The problem is that Norway’s constitution forbids any borrowing by state ministries or agencies, on the grounds that all funding must come from budget allocations approved by Parliament. “The loan violates (both) laws and regulations,” the ministry itself stated, adding that NSM had “gone far beyond its authority” in agreeing to the loan, which also carried “unfavourable terms” with interest rates of nearly 10 percent.
“This is a very serious matter,” Mehl said at a press conference, while also claiming she was only made aware of the loan in November. Newspaper Aftenposten has since reported that the loan doesn’t turn up in NSM’s own financial reports for last year, and that NSM reported only NOK 3,539 in interest payments in 2022.
Nor could the state auditor general (Riksrevisjonen) find any trace of the illegal loan, and has now launched a new audit of its own. It’s not entirely clear how and why the illegal loan suddenly emerged last month, prompting Nystrøm to resign. “I’m sorry for what’s happened,” Nystrøm wrote in a prepared statement, agreeing that it’s “a serious violation and I take complete responsibility for it.”
At the same time, however, Nystrøm (who took over as chief of NSM just two years ago) wrote that she’d been told NSM had operated “with this type of loan agreements since 2014” and that NSM had “been in dialogue with the ministry” before the loan and leasing contracts were signed. “When I became aware of the violation of regulations, I immediately launched an investigation and measures to correct the situation,” wrote Nystrøm. She has since denied most requests for interviews.
Mehl denies any “dialogue with the ministry” apart from receipt of a letter from NSM that it wanted to lease the office space at Fornebu, a request that was accepted by the ministry in a letter dated June 20, 2022. The actual leasing contract, however, was signed on June 1,2022, according to the ministry, and it contained “other terms” than those presented in May including the loan agreement between the parties.
The government thus claims that NSM entered into the loan agreement before presenting it to the minstry, and at terms that NSM would not have been allowed to fulfill. Now the ministry wants to pay off the loan in full and received majority support for that in Parliament on Monday, with both the Conservatives and the Socialist Left Party (SV) supporting he Labour-Center government’s request.
The Parliament’s own disciplinary committee, meanwhile, also calls the matter “extremely serious” and is poised to launch its own probe. “The constitution has clear rules for who can place debt upon the state, and it can only be done with full approval from the Parliament,” said the leader of the disciplinary committee, Peter Frølich of the Conservatives. “These rules were broken and that’s serious.”
He noted how Mehl and Nystrøm have conflicting accounts of what happened, with Mehl claiming her ministry was unaware of the loan and Nystrøm claiming it had been made aware of it. Frølich told newspaper Dagens Næringsliv (DN) during the weekend that there are still “many unanswered questions” over both how exactly the loan proceeds were spent, why a loan was needed and why both external and internal control mechanisms didn’t function.
On Monday, the conservative Progress Party called on Parliament to immediately summon Mehl in for a hearing. Progress may find itself in an awkward position, however, since the party had control of the justice ministry itself from 2013 to 2021 in the former Conservatives’ led government. If what Nystrøm is saying is true, Progress could also be guilty of being unaware of illegal loan agreements at NSM, even though they would have been established before Nystrøm took over at NSM in 2021.
Nystrøm, an engineer who formerly headed the center for cyber security at NTNU in Trondheim, had otherwise been a respected leader of NSM who constantly stressed the need for preparedness to ward off hacking attacks. She had also worked within cyber security at Telenor, Norway’s largest bank DNB and Symantec and most recently has warned about new, advanced cyber attacks against Norway. NSM had also rung alarms in October about serious holes in Norway’s digital security systems. Nystrøm disclosed in August that “several Norwegian institutions” and 12 ministries had been hacked last summer.
Mehl said she regretted Nystrøm’s resignation and thanked her for her work within Norwegian cyber defense, but also said it was correct for Nystrøm to resign under the circumstances.
Now Mehl’s the one left to “clean up and provide full clarity over what has happened,” Per-Willy Amundsen of the Progress Party told DN. “We register that there’s a wide gap between their versions of reality.”