Mongstad scandal
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The Mongstad scandal was the nick name given to a crisis in the Norwegian oil company Statoil in 1987-88 where the company exceed the NOK 8 billion budget by NOK 6 billion in upgrading the oil refinery at Mongstad. Retrospectively the reasons for the overexpenditure were credited bad planning, technical miscalculations and bad project management. The executives in Statoil were also accused of inability to act and for withholding information from the Norwegian Ministry of Petroleum and Energy. At the time the incident woke enormous media attention.
The first warnings of a budget overspending came on September 25, 1987, when the overexpenditure was estimated at NOK 3,8 billion. On November 20 the board of directors, led by Inge Johansen, had to withdraw. Two days later Chief Executive Officer Arve Johnsen also withdrew, at the time the only CEO in the history of the company. In January 1988 reports of a possibility of the overexpenditure accumulating another billion NOK were presented. By April the expected overspening was believed to be at NOK 8 billion, though the final sum ended at NOK 6 billion.
The enormous shock effect of the Mongstad scandal must be understood in the light of the social and political situation of Norway in 1988. Statoil was at the time a limited company wholly owned by the Norwegian Ministry of Petroleum and Energy, who managed the entire profit. After the company had started to make a profit around 1980 it had in the minds of people become the guarantee for welfare in the country. The company's transfers to the government tresury exceeded that of income tax. CEO Arve Johnsen was the man who couldn't do anything wrong, the Labour Party man who controlled Statoil as a king even during a conservative government. Prime Minister Kåre Willoch's attempt to minimize Statoil a few years earlier had failed completely. And at the same time came the bankruptcy in the largest bank, Den norsk Creditbank that had announced the start of the fall of the Yuppie age.
The media attention on the Mongstad scandal in 1988 was enormous, and was front-page material almost daily. The tabloid newspapers battles fiercely in trying to visualise the, at the time, almost unimaginable size of NOK 6 billion. The sum was creatively recalculated in kindergarten places, retirement home places, fighter jets etc. Some times the visualisation went over the absurb with pictures such as Dagbladets example of 6 billion = enough to buy one AG3 assault rifle for each of the countries 4,5 million inhabitants. For years the term a mong was used as a synonym for the number 6 billion.
