VZCZCXRO5253
OO RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHSM #0032/01 0110823
ZNY CCCCC ZZH
O 110823Z JAN 07
FM AMEMBASSY STOCKHOLM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1561
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 02 STOCKHOLM 000032 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 01/10/2017 
TAGS: PGOV PREL PINR SW
SUBJECT: SWEDEN:  HOW FM BILDT'S STOCK OPTIONS AFFECT HIS 
POLITICAL OPTIONS 
 
Classified By: Polcouns Casey Christensen, reason 1.4 (b) and (d). 
 
Summary and Comment 
-------------------- 
¶1.  (SBU)  Post-holiday headlines in Sweden have focused on 
Foreign Minister Carl Bildt and his recent decision to 
exercise options in a publicly traded Swedish company, Vostok 
Nafta, whose main holding is shares of the Russian energy 
giant Gazprom.  Bildt resigned from the board of Vostok Nafta 
on becoming Foreign Minister.  The options he had been 
granted in December 2004 and were set to mature two years 
later, on December 6, 2006 -- two months after Bildt joined 
the cabinet.  Bildt cashed in the options in December, 
netting a profit of $685,000.  While the existence of the 
options was publicly acknowledged when Bildt's became Foreign 
Minister in October 2006, the options were exercised while he 
was serving, and during a period when the government was 
considering how to respond to a proposed trans-Baltic 
pipeline to be built by Nordstream, of which Gazprom owns 51 
percent; the Nordstream gas line will pass close to Swedish 
territory.  A prosecutor has subpoenaed documents relating to 
the options transaction and has said he could make a decision 
as early as next week regarding possible criminal proceedings 
related to allegations against Bildt of conflict of interest 
and possible "bribery."  At the same time, the Parliament's 
Constitution Committee, which is chaired by a Social 
Democrat, is also taking up the options issue. 
 
¶2.  (c) Comment:  Bildt, a former Prime Minister himself, has 
been the star of Prime Minister Reinfeldt's cabinet.  At this 
juncture, his status in the government and his future 
prospects (including a rumored bid for Barroso's EU foreign 
policy position) will depend on the outcome of the legal and 
parliamentary investigations.  Sweden does not have a 
tradition of politicians coming and going, as Bildt did, 
between the private and public sectors.  The appointment of 
ministers is not subject to parliamentary scrutiny, and 
vetting has often been inadequate -- as Reinfeldt discovered 
when he lost two ministers to scandals (related to not paying 
television licensing fees and not paying taxes on household 
help) within his first month in office.  Bildt's situation is 
different from those affairs, however, in that the stock 
options were disclosed and did not become a major issue until 
after they were exercised.  The first hurdle Bildt will face 
is the prosecutor's report, which could come as early as next 
week.  A government lawyer told us there is no clear Swedish 
precedent, and the outcome of the criminal inquiry cannot be 
predicted.  If the prosecutor's report is favorable to Bildt, 
the issue will dissipate.  If unfavorable, both the legal and 
parliamentary procedures could gain steam.  End Summary and 
Comment. 
 
Weighing the Options 
-------------------- 
¶3.  (u) Sweden,s Foreign Minister and former Prime Minister 
Carl Bildt has come under increasing pressure concerning his 
former stock options in Vostok Nafta, where he served on the 
board of directors before being named Foreign Minister.  The 
options were exercised in December 2006, giving Bildt a 
pre-tax profit of $685,000.  Vostock Nafta,s capital 
consists predominantly of shares in the Russian gas monopoly 
Gazprom. 
 
¶4.  (u) On January 8, Chief Prosecutor Christer van der Kwast 
told the leading daily Svenska Dagbladet that he was 
conducting a preliminary investigation concerning Foreign 
Minister Bildt's stock options in Vostok Nafta, reviewing how 
Bildt had declared his holdings.  The preliminary 
investigation will determine whether there are grounds for a 
criminal investigation against the Foreign Minister for 
"inappropriate benefits." 
 
¶5.  (u) Van der Kwast told Svenska Dagbladet "I am sure that 
I can obtain evidence from the (subpoenaed) documents that 
can be the foundation of a decision as to whether there is to 
be a criminal investigation or not."  Questioned on the 
possibility of a criminal investigation Kwast said "...a 
possible suspicion is bribery.  That there is an impropriety 
in a legal sense, an improper benefit to Carl Bildt from the 
company in his new capacity as a Government minister." 
 
¶6.  (u) Although the matter attracted noticeable media 
attention following Bildt's appointment in October of last 
year, the revelation on January 8 that Chief Prosecutor 
Christer van der Kwast was conducting a preliminary 
investigation catapulted the affair to the top of the 
headlines.  The Chief Prosecutor indicated on January 9 that 
the decision whether to proceed with criminal investigations 
may be postponed until next week. 
 
¶7.  (u) One key problem Bildt faces is that a board decision 
was required to authorize Bildt to exercise the options after 
 
STOCKHOLM 00000032  002 OF 002 
 
 
he left the company and was serving a Foreign Minister.  A 
Vostok Nafta said, however, that five former board members 
who had earlier left the board were also granted such rights. 
 Since Vostok Nafta released this information the 
opposition's criticism appears to have toned down somewhat. 
Peter Eriksson, leader of the Green Party, who called for 
Bildt,s resignation on January 7, has taken a less harsh 
line in his latest statements. 
 
¶8.  (u) On January 10 the leading daily Svenska Dagbladet 
wrote that Bildt participated in a Government decision on 
November 9 to allow Peter Gaz, a Gazprom subsidiary, to 
continue investigating the possibility of a pipeline in the 
Baltic, and that it was unclear whether the conflict of 
interests had been properly addressed beforehand.  In the 
article Bildt,s spokesman says that this decision was a 
collective cabinet decision and that it is routine to 
consider potential conflicts of interests. 
NOBLE