Investigation, Oslo building | Used consultants illegally for five months

The story of an investigative case in the municipal enterprise Oslobygg keeps taking new turns. In a number of articles, Nettavisen has discussed an investigation which is about to become one of the most expensive in Norwegian history.

Now it appears that the bill has risen to NOK 20 million for this investigation. Audit company KPMG has cost Oslo’s taxpayers NOK 16 million more than the contract with the municipality allows.

The overspending alone is equivalent to the full salary of around 23 nurses for one year.

When KPMG was asked to undertake this “fact investigation”, the audit company was already Oslobygg’s internal auditor. This is a job that involves checking that accounting and auditing follow the book.

The conflict of interest is obvious, believes lawyer and investigation expert Birthe Maria Eriksen:

– In addition, the questions arise as to whether this is a case that should have been investigated at all! If the working relationship turned out to be as problematic as it apparently became, a solution should have been found in direct dialogue with the person concerned – termination agreement or other position, if necessary. This is sheer madness, she says.

Illegal consultant use for five months

When KPMG also took on the job of investigating a director, the budget they had to deal with burst quite quickly.

Invoices that Nettavisen have been able to see show that the limit in KPMG’s framework agreement broke already in August 2023. The limit was NOK 10 million for a four-year period from November 2021.

It took almost half a year before the municipality reacted. “Calls in excess of the maximum withdrawal will amount to illegal direct procurement,” wrote Oslobygg in a letter of resignation in February.

Nettavisen was then informed that KPMG had invoiced a total of NOK 15.6 million (plus VAT). But the bills have continued to pour in even after the dismissal. Now in May, the invoices show that KPMG invoiced Oslobygg for a total of NOK 26 million.

We have asked Oslobygg why and how they defend the use of money.

– Oslobygg continuously monitors the use of our framework agreements. Calls for framework agreements take place in accordance with the contract provisions and the procurement regulations, communications manager Trond Borge Ottersen writes in an email.

Seeking advice on termination

New invoices show that Oslobygg has now used KPMG to advise on how to dismiss a director.

This happened immediately after the same company carried out a “fact survey” to the tune of 20 million, which should be an objective basis for decision-making in the case.

In the Oslo District Court on 15 March, Oslobygg was convicted of invalid dismissal by Tore Moger, the investigated director. On the same day, the municipal company contacted KPMG, invoices Nettavisen has gained access to show.

As can be seen from the invoice specification, the intention is quite clear to get rid of Tore Moger:

– The fronts are getting steeper and steeper. Oslobygg cannot take him back after waging war via KPMG. So then they do whatever it takes to prevent him from coming back, says BI professor and investigation expert Petter Gottschalk.

Oslobygg declines to comment on the case citing that it is a “personnel matter”.

– Everything is wrong here

Birthe Maria Eriksen is a lawyer and expert in notification cases and investigations. He reacted with disbelief to this matter:

– Everything is wrong here. Lawyers must not undertake so-called factual investigations. If they carry out such an external investigation as has been carried out here, it must be carried out as an objective and competent, private investigation.

She refers to the Danish Bar Association’s new guidelines for private investigations, which emphasize that “the investigators must have a particularly independent role”, and further: “The investigators do not have a traditional client representation role as the client’s adviser and spokesperson”.

– Here, a permanent audit and legal liaison has carried out a private investigation. That in itself is problematic in relation to the Danish Bar Association’s rules. After that, it looks as if one has taken off the investigator’s hat and become a legal adviser again, in a dismissal case against the same person who has been the subject of the “objective” investigation. In that case, this is highly problematic, says Eriksen.

In the legal assessment of the year-long investigation, the Municipal Attorney concludes that the working relationship with Tore Moger, who has a long career in the construction industry, involves a risk that disqualification may arise in certain situations (more on this below).

– But this must have been obvious already when he was hired! says Eriksen.

She is also skeptical that director Moger was demoted even before the investigation started:

– The board of Oslobygg should consider whether it was appropriate to initiate a large-scale investigation and at the same time dismiss the person to be investigated. It does not appear that anyone has made a comprehensive assessment of the appropriateness of the costly strategy that has been chosen here.

Thought he was going to get his job back

Tore Moger thought the verdict in the Oslo district court meant that he would get his job back.

– I am relieved and very satisfied, Moger told Nettavisen when the verdict was announced on 15 March

Oslobygg director Eli Grimsby was more unclear about what kind of consequences the verdict would have.

– We will now go through the judgment and assess what this means for us, she stated.

In total, KPMG has invoiced NOK 75,000 for follow-up work following the judgment in the Oslo District Court. According to BI professor Petter Gottschalk, the case illustrates a common development in such cases, which he is strongly concerned about. Such a process to the point that one in practice abdicates from one’s own management, the professor believes.

– Investigation only leads to escalation, never to a long-term solution. But I understand well that they are moving on, because they have created a situation they cannot handle.

– May have been incompetent

At the end of March, the Municipal Attorney issued a legal assessment of KPMG’s extensive investigative report. It reviews the points where Moger was suspected of incompetence.

The municipal attorney concludes that there is a risk that Moger may have been disqualified due to connections to companies in the construction industry, particularly through family members’ ownership.

“There is reason to believe that Tore Moger and/or any of his direct subordinates may have been incompetent in connection with a number of decisions made in projects covered by KPMG’s investigation”writes the Municipal Attorney in his assessment.

But there are no points in the assessment where it is categorically established that Tore Moger has actually been incompetent in specific cases.

– They could save 20 million

According to Tore Moger himself, it is unclear what the Municipal Attorney actually means:

– Firstly, the Municipal Attorney’s assessment is incredibly vague as to what their conclusions actually entail. They are never specific about a single project where I have been incompetent, or what consequences such incompetence would have had for Oslobygg, says Moger to Nettavisen.

In addition, the assessment is based on information that was well known before the investigation began, Moger believes.

– This is precisely why we have always asked for such a legal assessment, but Oslobygg has not wanted to carry it out until now. I have also asked for the assessment to be carried out by an independent and objective third party, but Oslobygg has said no to that, says Moger, and continues:

– If such an assessment had been made to begin with, then Oslobygg would have saved NOK 20 million – and that is quite incredible.

Moger also reacts to Oslobygg releasing the legal assessment.

– The reason is that in our case management we have released this, so it is no longer exempt from public disclosure, writes Oslobygg in an email to Nettavisen.

– The fact that Oslobygg shares this assessment is quite incredible. It is basically a criminal offense to share a confidential document in this way. I have wanted to go out with the assessment myself, but have taken into account that the document is exempt from public disclosure. The fact that they are downgrading the stamp the Municipal Attorney has put on the document, without informing me about it, testifies to frivolous behaviour.

Does not answer questions

Nettavisen has asked Eli Grimsby a number of questions about the case. She says via her communications advisor Trond Borge Ottersen that she will not answer questions about the “personnel matter”.

– Why does Oslobygg think it is right to use the investigation firm to get help with a dismissal in a case where the company has been convicted of invalid dismissal? And where the same company has carried out an investigation of the person who was invalidly dismissed?

– If necessary, external suppliers are used within framework agreements to investigate and contribute to the internal proceedings in Oslobygg. The case processing itself takes place in Oslobygg, not with external suppliers, says Borge Ottersen in an email.

Director Eli Grimsby refuses to answer these questions:

– Can you explain why it is so important to get Tore Moger dismissed even though the judgment in the Oslo district court says that the change of notice was invalid?

– How will you defend spending taxpayers’ money on bringing in deer consultant help to get rid of a troublesome employee?

– Tore Moger thought he would get his job back with this verdict. What do you have to say to him about this use of advisers from KPMG Law immediately after the judgment in the Oslo District Court?