Sweden's Financial Supervisory Authority reported suspicions of corruption to the police in relation to pension fund Alecta, Stockholm's investment in real estate firm Heimstaden Bostad, a notice on the pension fund's website said.
The 1.2 trillion Swedish kronor ($110.2 billion) pension fund started investing in real estate firm Heimstaden Bostad in 2013. Its exposure amounts to about 49 billion kronor or 4% of Alecta's total assets.
According to a translation of a notice published on Alecta's website, the FSA "has reported suspicions of corruption in connection with Alecta's investment in Heimstaden Bostad."
The FSA has reported one or more people to the police and Alecta is "now awaiting the process," said Jan-Olof Jacke, chair of the pension fund's board, in the notice.
Sweden's FSA announced its investigation into Alecta's investment in September, looking at whether the pension fund followed the relevant regulations in connection with its investments in the firm.
Alecta had asked law firm Hammarskiold to assess its investment in Heimstaden Bostad, and the result was that there were "deviations from internal rules and that there were indications of violations of the law" related to the allocation, Jacke said.
The board then sought a second assessment from another law firm. "Since there were different assessments of possible violations of the law and since a police report on insufficient grounds could have negative consequences for both individuals and Alecta's customers, the board decided not to report to the police, and handed over both investigations to the Financial Supervisory Authority," Jacke said in the notice.
About 11 billion kronor of Alecta's investments are made up of dividends the pension fund received on its shares in Heimstaden Bostad, which were reinvested, according to a separate notice published on Alecta's website in September. The holdings are managed by Alecta's real assets unit, rather than by its wholly owned real estate company, Alecta Fatigheter AB, which was formed in 2021.
Heimstaden Bostad needed additional capital due to rising interest rates, Alecta said, and while the pension fund has received returns on its investment, it was "not enough payment for the risk we took, and there are also question marks regarding whether we have reasonable influence," the notice said.
An Alecta spokesperson declined to comment.
Alecta's risk management related to investments in collapsed U.S. banks has already been the subject of a regulatory investigation. The FSA launched a probe in May following the pension fund's 12 billion kronor exposure to Silicon Valley Bank and Signature Bank, which was written down to zero, and a 9.7 billion kronor holding in First Republic Bank, which was sold at a loss in March. The board made a number of changes to restore trust in the pension fund, including ousting CEO Magnus Billing. Peder Hasslev joined as CEO in September.
