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Something rotten blows in  

Credit:  Bojan Pancevski, Sunday Times, www.thesundaytimes.co.uk 8 April 2012 ~~

It’s like one of those tortuous twists from Borgen, the television political drama from Denmark, that confront the fictional prime minister Birgitte Nyborg. The Danish energy company behind the world’s largest wind farm in the Thames estuary has been hit by a pay scandal that could dash its plans in Britain.

Last week Anders Eldrup, chief executive of Dong Energy, was forced to resign after it emerged that he had given unauthorised pay packages worth millions to a group of top executives – including the head of its lucrative British wind energy arm. His dismissal has rocked the company, which is owned by the Danish state and is one of the largest renewable energy investors in Britain.

It is the main backer of the London Array, a £2 billion wind farm 12 miles off the Kent coast. When the first phase is completed this December it will be the largest in the world – and a showcase of the government’s low-carbon revolution.

The company also owns stakes in the Lincs wind farm, nearing completion off Skegness in Lincolnshire, and the Walney farm, 10 miles west of Barrow-in-Furness, Cumbria. It has invested £3.9 billion in Britain since 2004.

The dismissal of Eldrup, who was the driving force behind Dong’s push into Britain, raises questions over whether the company will pull back. It also caused an awkward moment for Prince Charles. On a visit to Copenhagen last week the prince was meant to meet Eldrup to be briefed on the company’s plans. The energy boss’s sudden resignation meant he met a stand-in recruited at the last minute.

Dong has surpassed most companies in taking advantage of Britain’s wind subsidy scheme, one of the most generous in the world. It has eight projects either in operation or being built.

Once the wind turbines are turned on, their owners are paid millions on top of the normal electricity price. These subsidies are one reason, along with the rising wholesale price of gas, for soaring household energy bills.

The Eldrup scandal erupted after a whistleblower raised the alarm over unusual pay deals that had been arranged for executives from the wind energy unit, dubbed the “golden four” in the Danish press.

The executives apparently demanded cash top-ups after receiving job offers from rivals. Eldrup agreed to the special payments but failed to tell the board. A law firm found Eldrup “disregarded the duties incumbent on him as the chief executive and to such an extent as to be characterised as disloyal”.

Since the scandal broke, two board members have resigned, while Eldrup has filed a lawsuit against the company for refusing to pay full severance.

Christian Skakkebaek, manager for the UK, was one of the executives who secured the special employment terms. The others were Torsten Lodberg Smed, head of renewables; Christina Grumstrup Sorensen, a senior vice-president; and Jakob Baruel Poulsen, deputy chief executive of the green power arm. The four were the core group that built the wind power division of Dong into a world leader in the sector.

The exact amounts of the unauthorised bonuses have not been published, but in egalitarian Denmark the episode has sparked outrage.

Eldrup had planned to build up to 20 huge offshore farms around Europe at a cost of £11 billion. With him gone, it is unclear if the company will see the plan through.

Lars Rohde, chief executive of ATP, Denmark’s most powerful pension fund and a big shareholder, said Eldrup’s demise would mean far fewer wind farms and lower profits for investors.

There is no suggestion Eldrup acted in his own interest. Once Denmark’s finance minister, he joined Dong in 2001 and orchestrated a merger with five other energy companies to create today’s giant.

A spokesman said only one of the four executives in question – Poulsen, who reportedly earned more than Eldrup himself – would no longer work for the company. The others will remain, under the same terms. “You cannot punish employees for being able to negotiate good contracts for themselves,” said the spokesman.

Eldrup said: “The [executives] were attractive to our competitors but I wanted to keep them on board because I believed they were extraordinary and that the company could profit from their leadership.”;

He added: “I had no personal interest in this.”;

The scandal has struck a raw nerve in Denmark. Jens Jakobsson, a senior Dong executive, said: “One of our technicians was repairing electricity cables when a passer-by subjected him to a barrage of abuse, spat on him and shouted that Dong was squandering his money.”;

Even Borgen’s Nyborg might have had to put this scandal in the “too hard” basket.

Additional reporting by Clare MacCarthy in Copenhagen

Source:  Bojan Pancevski, Sunday Times, www.thesundaytimes.co.uk 8 April 2012

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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