NSM took out illegal loans of NOK 200 million. They made several mistakes. But the Ministry of Justice should also do things differently, the committee states.
This is what it looked like when the now-departed NSM director Sofie Nystrøm welcomed Emilie Enger Mehl in October last year. Photo: Gorm Kallestad / NTB
Published: 03/01/2024 12:57 | Updated: 03/01/2024 15:01
The short version
- The National Security Authority (NSM) took out illegal loans of 200 million for construction at Fornebu.
The summary is created with the help of artificial intelligence (AI) and quality assured by Aftenposten’s journalists.
Short version is for subscribers only
On 8 December last year, the loan bomb exploded in the National Security Authority (NSM). Director Sofie Nystrøm went public when it became known that NSM had taken out illegal loans of NOK 200 million.
The loans were taken out to adapt a new building at Fornebu. The lender was the landlord, the company Norwegian Property.
Since then, a committee led by former central bank governor Svein Gjedrem has reviewed the case. The report came on Friday.
– Error after error, was the conclusion from Gjedrem.
The report paints a picture of an NSM that lacked control over the rules:
- NSM was not allowed to borrow money.
- NSM also did not have coverage in the current budgets for the total rental and loan costs they undertook.
- The lease was signed before JD had finished processing the case. NSM breached its duty to inform JD at the right time about the precise content of the lease.
- The decision-making basis in NSM was neither complete nor correct, nor was it quality assured or understood at management level.
- The building and rental instructions, which state that before agreements are entered into, all relevant matters must be clarified and assessed, were breached. There was a failure in the proceedings when the lease and loan agreements were drawn up and entered into.
- The loan has been used in part to finance investments for which NSM has asked for grants without success (investment proposals).
If NSM had used Statsbygg as an adviser, taking out loans would not have been possible. Other errors have been avoided.
Throughout the winter, the discussion largely revolved around two questions.
What could the ministry have done differently?
The question that has most caused the opposition and others to question Justice Minister Emilie Enger Mehl’s control over NSM is the following:
The NSM is under the Ministry of Justice and Emergency Preparedness. How could her ministry avoid capturing the loans?
This also illuminates the selection.
There is no doubt that the management of NSM bears responsibility for the loan and the financial situation they found themselves in, writes the committee.
Men:
- The Ministry of Justice (JD) should familiarize itself better with the financial and administrative management of NSM. JD took over responsibility for NSM in 2019.
- The ministry should also have made sure that director Sofie Nystrøm was equipped to manage NSM’s finances when she was hired in 2021.
- The Ministry of Justice could itself ask for the lease during the proceedings.
It was JD who processed and approved NSM’s wish to enter into a lease agreement at Snarøyveien 36 in Fornebu. This happened despite warnings. And despite the fact that the ministry knew that the landlord would finance changes to the building with many millions.
JD was also aware that NSM spent far too much money. Aftenposten has been given access to documents which show that NSM went towards a large increase in spending last year. The ministry followed economic developments closely. But they did not discover the loan agreements until November.
Among other things, the Ministry of Finance has questioned whether the Ministry of Justice and Emergency Preparedness could not have uncovered and possibly prevented the breaches of the rules earlier.
How unusual are such loan agreements?
When Minister of Justice Mehl explained the case for the first time, she went high on the pitch. The loans were illegal. The director had to go.
Then came the nuances.
Dagens Næringsliv showed that the Ministry of Justice and Emergency Preparedness had also paid down on upgrades to its building with increased rental costs.
Aftenposten has told that NSM could pay with loans and interest also in previous lease agreements. NSM’s chief financial officer himself believed that Sofie Nystrøm was authorized to take out loans.
The committee that presented its report on Friday also recommends a clarification of the rules around how investments in rental buildings should be financed. Among other things, it is recommended that security upgrades in rental buildings should be financed directly, and not through future rent.