Response to interpellation 2023/24:552 on auditor's duty and control

Justitieministern Gunnar Strömmer (M)

Madam Speaker! Markus Kallifatides has asked me if I and the government intend to take measures to ensure that the legal rules regarding the auditor's duty are complied with.

In the vast majority of companies, there is, of course, a striving to follow laws and regulations. But in recent years, it has become increasingly clear that companies are also being used for criminal purposes by unscrupulous actors in an ever more systematic manner.

That companies are exploited for unprofessional or illegal activities is, as Markus Kallifatides mentions, a problem that deserves to be taken very seriously, especially when it occurs within the framework of organized crime.

Crime in companies leads to the society suffering large losses, for example through fraud against the welfare systems and through lost tax revenues. Honest business owners also risk being wiped out when they are forced to compete with unscrupulous and criminal actors. With the profits generated in companies, other serious crime can also be financed. The Government is therefore actively working on several levels to prevent companies from being exploited to commit crimes.

As late as February, the government presented a national strategy against organized crime – it is the first of its kind. The strategy contains priorities, measures, and goals to increase society's resilience against organized crime. The work to prevent companies from being used as tools for crime is identified in the strategy as a priority area.

Part of the government's work against crime in companies involves strengthening Bolagsverket's control function. At the beginning of March, the government decided on an amendment to the agency's instructions, which means that the authority shall actively work to ensure that the information in the agency's registers is correct. Through these controls, Bolagsverket can counteract the use of shell companies to hide the actors who use a company to commit crimes. Other criminal schemes can also be countered in this way. Through the amendment, Bolagsverket has also received better opportunities to cooperate with other authorities for a crime-prevention purpose.

That companies subject to audit lack an auditor can, of course, be part of a criminal scheme, but it can also be a matter of an oversight. An audit by the Swedish National Audit Office has shown that the majority of the companies that lacked auditors, despite being required to have them, appointed auditors the following year. If it is discovered during an authority inspection or in some other way that a company that is supposed to have auditors does not have them, Bolagsverket shall act, ultimately through a compulsory liquidation of the company. Bolagsverket has also decided on compulsory liquidation in a number of cases in recent years. The Agency thus has powerful tools to use against companies that break the rules.

Since many companies pass the threshold for mandatory auditing every year, extensive controls would be required to ensure that all companies that are supposed to have auditors also have them at any given time. Accessing the criminal economy and preventing companies from being exploited as criminal tools is a priority issue for the government. I am therefore following the developments closely and am not averse to taking further measures if it should prove necessary.

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Markus Kallifatides (S)

Madam Speaker! Thank you, Minister Strömmer, for the answer! Bookkeeping crimes and tax crimes are the most common crimes with a connection to companies. Companies can also, as the Minister pointed out, be used to commit more or less large-scale invoice and credit frauds against other companies or private individuals. But perhaps it has been particularly noted that companies have come to play a major role when it comes to frauds against the welfare systems, when various forms of support and grants from the public sector have been exploited.

Questions regarding the use of limited companies for unserious and illegal activities simply deserve great attention - I believe we agree on that - not least since persons with links to organized crime are actually commonly found in corporate boards in the country.

It was against this background that I truly opened my eyes in February when I took part of Sweden's Television's review of companies in the bar and restaurant industry regarding the obligation for limited companies of a certain size to have an auditor.

It turned out that 4,734 audited companies were required by the law's criteria to have an auditor for the financial year 2022, but that 830 of these companies lacked auditors. Hardly every fifth of the companies subject to audit requirements lacked an auditor, Madam Speaker.

The industry and employer organization Visita commented in a written response to Sveriges Television's questions regarding this report: Obviously, control functions are lacking to be able to follow up that laws and regulations are being observed.

I shared the view that Visita expressed: Obviously, control functions are lacking to be able to follow up that laws and regulations are being complied with. One can also say, as Germans sometimes say, that trust is good but control is better, at least when dealing with profit-seeking companies but perhaps also in the broadest sense.

From the investigation report Bolag och brott, it can be read that precisely this—that no authority has a mandate to monitor compliance with the auditor's duty. The responsibility lies with the companies themselves. Bolagsverket has, in and of itself, the possibility to request the company be placed into liquidation if auditors are missing in a company subject to the auditor's duty. It is just that they do not check systematically.

My question was, therefore, whether the Minister and the Government intend to take measures to ensure that the legal rules regarding the auditor's duty are complied with. In his answer, the Minister states that part of the Government's work against crime in companies is precisely about strengthening Bolagsverket's control function and that in the beginning of March, i.e., after I submitted my interpellation, a decision was made on an amendment of the agency's instructions - on the proposal of Skatteverket, if I remember correctly - which means that the agency shall actively work to ensure that the information in the agency's registers is correct. We Social Democrats welcome this change.

The Minister emphasizes in his response that extensive controls would be required to ensure that all companies that are to have auditors also have them at any given time.

Madam Speaker! I would like to follow up on how the Minister views the opportunities in a digitized environment, with the potential of various forms of artificial intelligence, to also further develop Bolagsverket's review of received data.

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Justitieministern Gunnar Strömmer (M)

Madam Speaker! Thank you, Markus Kallifatides, for the opportunity to discuss this very important issue this morning!

Yes, organized crime must be combated on several different fronts simultaneously.

When it comes to the shootings and explosions during the past day - we have experienced yet another shooting in the Stockholm area - one must naturally address the gross violence directly. No decent society can live with shootings and explosions at the level that Sweden has had for nearly ten years in an escalating manner. Therefore, we are doing very much that is directed precisely against the gross violence.

But the national strategy against organized crime, the first of its kind, which the government decided on at the start of the new year, takes a broader approach. It emphasizes the importance of the fact that if we are to combat organized crime in the long term, we must take very offensive measures on a long series of fronts in parallel, in addition to striking at the gross violence.

It is not least about breaking the new recruitment of children and young people into the criminal networks but also about choking the economic base for this criminality. This criminality is driven to a high degree by money. It is largely about narcotics crime. But now it seems that economic crime has even overtaken narcotics as the main source of income for the criminal networks. There, there are frauds of various kinds. These are, of course, frauds that affect individuals, not least the elderly, but it is also very systematic frauds – tax crimes and other economic crimes – that affect the welfare systems and the taxpayers as a collective.

It is of crucial importance that we succeed in choking the criminal economy so that we can also reach the most brutal expressions of organized crime. Therefore, it is very good that we are discussing these issues today.

Companies that grow and generate profits that can be reinvested are absolutely crucial, because with a prosperous society that develops and becomes wealthier, we can invest more in welfare. I believe we are in complete agreement on that. Therefore, it is also important that we design crime fighting in this area in such a way that we reach the criminals without creating unnecessary bureaucracy and regulatory burden for the vast majority of all entrepreneurs, who are, after all, law-abiding.

We have a good basis for this work with the report that we have both mentioned, which aims at exactly companies as tools for crime. One of the issues raised there concerns precisely the question of auditing and the importance of auditing. And I want to emphasize the importance of auditing, especially of course if one conducts activities of a larger scale.

In March, we changed the ordinance and gave Bolagsverket a very clear instruction to actively ensure that the information in their registers is correct regarding, for example, auditors. One could say that it is a response to the very reasonable demand that someone must ensure that the information in the registers is correct. Otherwise, there is no basis for taking actions from the outside. Just as Markus Kallifatides mentions, this change is requested from several sides. It is also one of the proposals in the current investigation and is possible to implement at a fast pace. Some other proposals are more far-reaching and require legislative changes. In those cases, we will have to return with a government bill.

I am also open to what Markus Kallifatides says regarding digitalization, AI and other matters. It is clear that we must ensure that technological development becomes a winning lot for crime fighting. In that, there are also, of course, better opportunities to control very extensive information, for example, data in registers.

The speech at riksdagen.se, in Swedish (opens in a new tab)

Markus Kallifatides (S)

Madam Speaker! I thank Gunnar Strömmer for the answers.

I want to emphasize that there is a great consensus between us Social Democrats and Gunnar Strömer's party, the Moderates, regarding the importance of combating organized crime, not least its violent nature.

The focus in my interpellation is more on the other side, namely the large-scale economic crime, which has connections to this, but also a broader flora of economic irregularities that can cost taxpayers dearly. But I want to mark our consensus and our common ambitions to a large extent in this area.

Over a long series of years, investigations and reports have emerged with indications that companies, not least limited companies, are used for criminal purposes. The Swedish Crime Prevention Council sounded the alarm in 2016. A large government investigation on aggravated welfare crime was presented in 2017. A long series of measures have also been taken. The creation of the Swedish Payments Agency, the result of a government investigation initiated in 2018 and submitted in 2020, can be mentioned. The current government has in recent days presented a bill on significantly more facilitating secrecy provisions for authorities.

Bolagsverket shall during this year account for how the work with measures to prevent crime has been strengthened. The agency shall also propose measures it can take to prevent crime and to counteract the registration of incorrect information, as well as report what is required to enable a strengthening of the agency's crime prevention activities.

In its referral response to the investigation report Bolag och brott, the Economic Crime Authority argued that the crime prevention work should be further clarified in order to give special weight to the crime prevention mandate in relation to that which involves service for citizens and companies. Such a change applies to the ordinance on instructions for Bolagsverket from and including 1 April.

The Swedish Economic Crime Authority stated that the Swedish Companies Registration Office should also perform checks of submitted data in other respects than, for example, to identify shell companies, and that with the help of digital technology it should be possible to develop systems to identify unreasonable deviations and inaccuracies in submitted annual reports, for example.

The Swedish Tax Agency, Madam Speaker, noted on its side in its referral response to Bolag och brott that more and more companies submit annual reports digitally and that a memorandum from the Ministry of Justice proposes that such digital submission should be made mandatory for the vast majority of companies. Against that background, the Swedish Tax Agency considers that the Swedish Companies Registration Office should be able to establish systems to effectively monitor which companies meet the requirements to have auditors.

I repeat the question: How does the Minister for Justice view the issue of the controlling function regarding register data in Bolagsverket in the current situation?

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Justitieministern Gunnar Strömmer (M)

Madam Speaker! Let me also begin this contribution by, of course, underlining the importance of high requirements for companies regarding reporting and, where applicable, auditing, and ensuring that the information in the state's various registers is correct. It is in that light that one should see the important change that Bolagsverket has now received an instruction to very actively ensure that information about auditors in Bolagsverket's registers is correct. This is crucial in order to then be able to direct its controls towards the companies that do not have auditors. In cases where it is not a matter of an oversight, one should also be able to direct very powerful measures, including compulsory liquidation if required, against the companies.

I also think, as the Swedish Tax Agency and for that matter others have pointed out, that new technology of course provides new opportunities. This does not only concern Bolagsverket and their registers, but it concerns our authorities in general, which hold an enormous amount of information. A major challenge in a non-digitalized world has, of course, been to be able to systematize, scrutinize, and have control over all the information collected in the authorities' various systems. It is clear that technological development provides completely new opportunities for that.

The question of how one can use artificial intelligence to be able to analyze and control, for example, register data or other critical information is very interesting. I also assume that there is an ongoing dialogue in relation to current authorities. Many of them do not fall under the Ministry of Justice's umbrella, but I know that a dialogue is continuously being held on how one can further streamline the controls with that type of tool.

I also want to highlight something that Markus Kallifatides mentioned in passing but which is completely central, namely the possibility of sharing information between authorities. If we are to achieve a real systemic force in the controls of unserious actors, whether they are companies or individuals committing crimes without doing so in corporate form, efficient information sharing between authorities is absolutely crucial. We know that the correct rigorous confidentiality barriers are in place for this to be able to occur in an efficient manner.

Here I want to mention several ongoing legislative projects aimed at tearing down such obstacles. One was a proposal we received in the autumn concerning the obligation of various actors to provide information to the Swedish Police Authority in order to be able to assist in their crime-fighting. We tabled a government bill in March which I believe the Riksdag has already taken a position on. It targets crime in the working life and the possibility of sharing information between different actors in order to be able to tackle, among other things, crime in the working life and fraud in the area. It has also highlighted a broader need and a demand from many agencies for a general secrecy-breaking rule that, in short, makes it possible for agencies, regardless of which crime and which agencies we are talking about, to share information in an effective way in order to be able to gain real power in control, follow-up, and measures against unscrupulous and criminal companies.

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Markus Kallifatides (S)

Madam Speaker! I thank Minister Strömmer for the opportunity to exchange thoughts and some arguments here today to further sharpen the elements of order and tidiness in our society. It is, after all, the intention that laws and rules should be followed. If the laws are bad, we shall change them in democratic order, as a kind of general rule in any case. I have particularly tried to highlight the potential in further sharpening the authorities' internal control work. The question of sharing information is another issue that many will debate with the Minister. We Social Democrats welcome reinforcements of the authorities' controlling function, sometimes at the expense of maximum service to individual citizens.

Gunnar Strömmer has once again underlined the importance of accessing the criminal economy, which involves much larger sums of money than the more delimited drug trade today, and of preventing companies from being exploited as criminal tools. Gunnar Strömmer states that the government is following the developments closely and is not averse to taking further measures. We Social Democrats want to be a constructive opposition that contributes in this area.

One of the issues that the investigation report Companies and Crime also addressed, which the Minister for Justice mentioned, was the question of the largely abolished audit obligation. It is a reform that, according to the National Audit Office 2017, cost more than it was worth, a reform that heavy authorities such as the Swedish Tax Agency and the Swedish Economic Crime Authority have problematized. The investigation Companies and Crime presents arguments for and against a reintroduction and variants of a full or partial reintroduction of a broader audit obligation. It is obvious to us that a potential reintroduction or an expansion of the audit obligation requires a longer implementation period so that there are auditors, quite simply. There are more questions regarding the limited company form to consider, such as the minimum size of the share capital.

For my part, I see that it is truly high time to put the market-liberal era to rest and accept that there has broadly been a significant degree of naivety here in this country regarding unintended and unwanted consequences.

(Applause)

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Justitieministern Gunnar Strömmer (M)

Madam Speaker! I thank Markus Kallifatides again for the opportunity to discuss these important issues.

Strangling the criminal economy is absolutely crucial for us to be able to tackle organized crime in the long term. On this, we are in complete agreement. We shall mobilize the entire systemic power in our agencies and in the justice system, of course. But it will require a much broader mobilization that encompasses many other agencies. Some of them we have mentioned today: Bolagsverket and Skatteverket. A few more should be mentioned: Försäkringskassan, Arbetsförmedlingen and Lantmäteriet when it comes to real estate, money laundering and so on. It is obvious.

It concerns several different things. Information sharing is extremely central. If crime fighting is to gain momentum based on, for example, register data from Bolagsverket, it is largely also a matter of cooperation – in Bolagsverket's case with other authorities – in order to be able to achieve this. Being able to tear down today's secrecy barriers for an efficient sharing of information is absolutely crucial. But in this lies also, as Markus Kallifatides points out today, the importance of strengthening the authorities' control functions within their respective areas of responsibility.

Again: The instruction introduced to Bolagsverket to, from March/April onwards, actively ensure that the information regarding auditors in their registers is correct is a very important part of this.

Regarding the audit obligation, it is exactly as Markus Kallifatides says. The investigator has in this report presented arguments for and against and different models regarding this. This work is ongoing in the Government Offices here and now. I look forward to returning to the Riksdag with a government bill where we take the broader approach based on this report.

The interpellations debate was hereby concluded.

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