The Swedish Inheritance Fund – money in search of meaning

The Swedish NAO considers that the applications for project grants from the Swedish Inheritance Fund often comprise excessive staffing and budgets. The processing of applications by the Swedish Legal, Financial and Administrative Services Agency involves engaging in an extensive dialogue with the applicant organisation on design, staffing and budget. The procedure provides assistance to the applicant, but also means that applicant organisations know that the budget for which they are applying will be the starting point for a dialogue. The Swedish NAO assesses that, essentially, the first budget request from the applicant organisation can often be seen as a bargaining offer. Since competition for the money from the Fund is low, lengthy, coaching dialogues about the design of the project application risk leading to poor economical use of the legacies of the deceased.

The Swedish Legal, Financial and Administrative Services Agency’s controls on organisations applying for project grants are not sufficiently effective in terms of detecting organisations that lack the capacity to pursue large projects, or that are unscrupulous. For this reason, many flaws are discovered later – in controls of ongoing projects. The Swedish NAO’s audit shows that the consequences for those who commit serious errors are not sufficiently severe. This leads to the preventive effect of the controls being too weak. The Swedish NAO’s controls of its own risk sampling found more numerous and serious errors than those of the Swedish Legal, Financial and Administrative Services Agency, particularly in the form of dual employment and related-party situations.

The Swedish NAO’s audit shows that there is a history of financial crime, organised crime and crime that threatens democracy among employees and signatories in current Inheritance Fund projects. Furthermore, both individuals active in projects, and the organisations themselves that have received project grants from the Swedish Inheritance Fund, are heavily over-represented in the money laundering register. Of course, this does not automatically mean that they have also used the grant from the Inheritance Fund for criminal purposes. However, it is serious enough if people with a criminal past apply for, and are awarded, grants from the Swedish Inheritance Fund. This is an indication that the grants might potentially be used for illegal purposes, which is particularly serious as it concerns the legacies of deceased persons.

Even if controls were reinforced and legislative amendments were to enable extended control possibilities for the Swedish Legal, Financial and Administrative Services Agency, the Swedish NAO nevertheless considers that there is too much money to distribute in relation to important projects. This, in turn, is linked to the terms and conditions for grants. Over the past ten years, the Fund’s income has exceeded expenditure and the number of grant applications has not increased sufficiently to reverse this trend. If this imbalance persists, it will not be sustainable.

In light of this, the Swedish NAO considers that the Government needs to take steps aimed at a new order for how the legacies of deceased persons without heirs or a will are to be managed appropriately, effectively and with respect for the deceased. The Swedish NAO’s audit shows that equivalent legacies in numerous comparable countries accrue to the state and that the state budget, with the democratic decision-making process that surrounds it, is considered better apt to prioritise more effectively between different needs in society.