Swedish police finds no evidence of hacking in Malta pension ‘bust’

A Maltese pension fund suspended by the Swedish pensions agency earlier this year has been exonerated from criminal allegations of having carried out illegal hacking, the Stockholm prosecution authority has said.

The pension fund, Falcon Funds Sicav, was de-listed from a platform of private pensions offered to Swedish savers back in June 2016, after it was accused of having failed “to carry out its assignment in a prudent and professional manner.”

An appeal was filed by its directors, who include Nationalist MP Tonio Fenech, protesting the pensions agency’s claims that some of the fund’s underlying investments could not be reliably valued. But the appeal was refused and the pension fund remains delisted.

Last month, Swedish police said it could not prosecute Konsumentkraft, a call centre subcontracted by Falcon Funds’ agent to sell the pension fund to savers, on accusations that it obtained illegal access to savers’ accounts to transfer their funds from one pension fund to Falcon Funds.

The Swedish pensions agency had accused Falcon Funds of being responsible for the actions of the Konsumentkraft, which used misleading sales tactics to convince savers to move their pensions from one private fund to the other.

But the prosecuting agency in Stockholm said that it was savers who provided their e-id details to the call centre, which allowed its financial advisors to use this information to enter the pension authority’s e-service and carry out the transfers.

“It is clear that a number of people – associated with a Swedish company that provides financial advice to individuals – have signed into a number of Swedish pension savers accounts at the pension authority and transferred the retirement savings of these pension savers to a fund manager based on Malta…

“A prerequisite for the crime of hacking is that the actions taken by the hacker are unauthorized. This means that an act, made in consent with the person who has the right to dispose of the concerned data, is not illicit.”

The Swedish pensions authority alleged that it was forbidden for anybody but the holder of the e-id to access the system with that identification code. However, the Stockholm prosecutor said that there was no rule to support this opinion. “On the basis of this judgement [it] must thus be that the pension savers can consent to the above mentioned procedure.”

Indeed concerned pension savers, who spoke about the way Konsumentkraft advisors would ask them to transfer their savings to Falcon Funds, said that almost all of them had provided their e-identification details to the financial advisors and consented to the changes in their fund selection.

During the raid in the Swedish company’s premises, instructions and scripts for the advisors’ phone calls with the pension savers were found.

“These instructions only show that the purpose of the calls was to get the necessary e-identification details and the pension savers’ consent to make the fund selection… it is also very unlikely that it would be possible to sign in and select funds without the pension savers providing their e-identification details to the financial advisors. Nothing in the inquiry indicates that the financial advisors have acquired the e-identification details in another way,” the prosecutors said.

“The only possibility for the reported procedure to be criminal would be if a pension saver had given his e-identification details to a financial advisor, but not his consent to the financial advisor to use said details for signing in and/or selecting funds and that the financial advisor nonetheless used the details for this purpose.”

Misleading sales tactics

Originally the Swedish pensions authority accused Falcon Funds of having used the call-centre Konsumentkraft, which carried out “at least 1,971 suspect ID takeovers” and used fraudulent sales tactics to tell Swedish pension savers to put their monies in Falcon Funds between January 2015 and February 2016.

Falcon Funds had defended itself from accusations that Konsumentkraft’s employees illegally gained access to pension savers’ accounts, saying that it was its Swedish paying agent, Stellum, which engaged Konsumentkraft.

According to Swedish TV4’s programme ‘Cold Facts’, which investigated the way savers were encouraged to switch pensions, some 2,000 clients could have been misled into making such transfers after being called up by Konsumentkraft.

‘Cold Facts’ spoke to former employees of Konsumentkraft in Alicante, who said their company was paid by Falcon Funds to sell the fund to unknowing Swedish pension savers. 

One former worker, Sara Oloffson, said she would call pension savers, identifying herself as calling from “Konsumentfrakt, under Financial Authority supervision regarding your premium pension.”

Another former worker, Cedrik, said the clients were led to believe they could choose from a variety of funds. “We only present Falcon Funds as a ‘choice’ since it was the only fund that paid us for what we did. Even if they’d wanted another fund it wasn’t going to happen. We couldn’t do it, we just had the one fund.”

The Konsumentkraft advisors would ask clients for their electronic IDs, to log onto the system using their national identity numbers – which they already had in their possession – and see what pensions they held.

“I could just empty the whole lot – transfer it all to Falcon,” Sara said. “Although sales were going well, management wanted even more capital moving into Falcon Funds. So we were told to say that we’re calling on behalf of the Swedish Pensions Authority. Many of us questioned this.”

This enabled the Konsumentkraft advisors to request clients’ PIN numbers to access their pension accounts. “They’d say: ‘yes, go ahead, I don’t know what’s what anyway’. So we just cleared it all out and placed it in Falcon.”