Report 75 — The Testimonies of Mikael Runsten, Mats Lindqvist, and Jodi Anhorn
During the week of 17 February 2026, three economics experts testified regarding the economic profits derived from Lundin Oil’s sale of Block 5A.
The testimony of Mikael Runsten
Mikael Runsten was called by the prosecution to testify about methods for calculating the economic benefits obtained by Lundin Petroleum AB through the 2003 sale of Block 5A in Sudan. Runsten is a lecturer and researcher who worked for approximately twenty years at the Stockholm School of Economics, specializing in accounting and financial analysis. His research has focused on the relationship between accounting information and stock prices. He has previously testified as an expert in several legal proceedings.
Runsten began his presentation by describing the financial principle of the time value of money, explaining that money available today is worth more than the same amount in the future due to factors such as inflation, uncertainty, and the opportunity cost of capital. This being the case, a discounting rate must be applied in calculating the future value. Then, one must calculate a reasonable interest rate.
Runsten then described how companies are financed and how the type of financing can affect the assessment of economic benefits. A company’s operations can be financed through a combination of equity and loans. Equity is capital provided by owners and accumulated profits in the company, while loans are funds provided by lenders such as banks. The risk characteristics of these two forms of financing differ significantly: lenders generally receive a predetermined return and bear limited risk, while shareholders bear the main financial risk but may also benefit from higher returns if the company performs well. Because of this difference in risk, the required rate of return on equity is typically higher than the cost of debt.
With this background, Runsten explained what role the profit from the sale of Block 5A played. According to Lundin Petroleum’s annual report for 2003, the company sold Block 5A to Petronas for 1.184 billion SEK (142.5 million USD at the time), resulting in a profit of 720 million SEK. Lundin Petroleum’s balance sheet at the end of 2002, prior to the transaction, showed cash and bank holdings of 248 million SEK, loans of approximately 1 billion SEK, and equity of about 934 million SEK. The payment from the sale significantly increased the company’s liquidity.
Runsten explained that the profit strengthened the company’s equity. Equity gives a company a financial power, he continued. This power can be used to borrow more money to finance new projects. He illustrated the financial implications of the profit through several hypothetical scenarios, including one in which surplus liquidity is used to repay debt, thereby reducing future interest costs and giving the company the financial “superpower” as he called it to make future investments. Runsten used the analogy of an individual with the financial means to make a down payment and obtain a loan to buy a house. The same, he explained, is true for companies: if Lundin were to pay off loans, they would increase their liquidity which in turn would enable them to obtain new loans to make additional investments.
Lundin Oil’s annual reports from 2003 and 2004 reflect the importance of the sale of Block 5A for the company, Runsten pointed out, with the company enjoying a strong balance sheet, substantial cash reserves, and no long-term debt. Company leadership publicly stated that the profits were vital to finance their expansion and acquisitions[EW1] . According to Runsten’s analysis of the company’s financial development, the proceeds from the sale were effectively reinvested in the company’s operations. By the end of 2004, Lundin Petroleum had significantly expanded its asset base, with invested capital increasing substantially – nearly tripling – and additional profits being generated. The strengthened equity base also enabled the company to raise additional debt to finance new acquisitions of oil and gas assets.
The company could have chosen to pay out dividends to shareholders immediately after the sale but decided instead to prioritise growth and financial flexibility. In Runsten’s view, this confirmed that the profits were not redundant, as the defence has argued, but instead were a critical component of the company’s growth strategy. Runsten’s conclusion was that Lundin Oil had benefited greatly from the profits of the Block 5A sale for many years.
Runsten then addressed the value growth of the profit over time, explaining that he applied two different valuation methods to calculate this. The first method was based on the expected return that investors would require when providing equity capital to an oil exploration company. Using the Capital Asset Pricing Model (CAPM), he calculated the cost of equity as the sum of the risk-free interest rate and a market risk premium adjusted by a beta coefficient reflecting the volatility of Lundin Petroleum’s share price relative to the market. Runsten calculated a required return on equity of about 8.3% for Lundin Petroleum. Applying this annual return to the original profit of 720 million SEK produced an estimated value of approximately 2.38 billion SEK after fifteen years in 2018 and about 3.15 billion SEK after 18 years in 2021. These calculations reflect the expected growth of capital when invested as equity in a company with a similar risk profile.
The second method was based on the actual development of Lundin Petroleum’s share price. Runsten first calculated how many shares the company would have needed to issue in order to raise SEK 720 million through a new share issue before the profit from the Block 5A sale became publicly known. Given a share price of approximately SEK 9 at that time, the company would have needed to issue around 80 million new shares, corresponding to roughly 24.1 percent of the company’s total shares after the hypothetical issue. Runsten then calculated how the value of such an ownership stake would have developed over time. Based on this method, the value of the initial capital contribution would have increased to approximately 16.2 billion SEK by the end of 2018, and to approximately 25.0 billion SEK by the end of 2021. According to Runsten, this corresponds to an average annual return of roughly 22% for the first period and about 21% for the longer period.
In conclusion, Runsten stated that the profit of SEK 720 million from the Block 5A transaction should be viewed as a capital contribution to Lundin Petroleum’s equity that strengthened the company’s financial capacity and enabled further expansion. Depending on the method used to estimate the growth in value over time, the economic advantage generated by this capital could be calculated as around 2 to 3 billion SEK under a theoretical expected-return model or substantially more when measured using the company’s actual share price development.
Runsten was asked by the prosecution why he used the company group as the “reasonable economic entity.” This has been a key issue for the defence, which has argued that the prosecution has wrongly conflated the parent companies and subsidiaries into a single group. The defense position has been that the subsidiaries are distinct legal entities. Runsten answered that company structures can vary and groups can be formed in a multitude of ways. Since the 1932 Kreuger crash, a group’s consolidated financial statements have become the main focus and the group the relevant economic entity. A parent company may be only an owner of subsidiaries, which makes it useless to only study their financials. The same goes for a subsidiary: it is useless to study their finances alone. He likened a company group to a family, saying if you move money between family members, the family itself still has the same amount. If one were to buy stock in Lundin Petroleum AB, one would have ownership over the subsidiaries too. In this case, LPAB had full ownership of their subsidiary in Sudan and the profit from the sale affected the whole company group. LPAB itself highlighted the profit in communications with their shareholders. It gave them the financial power to finance new investments, Runsten concluded.
The testimony of Mats Lindqvist
Mats Lindqvist testified as an expert witness for the defence and presented an analysis on behalf of Orrön Energy AB, formerly known as Lundin Petroleum AB. Lindqvist, a partner at the consulting firm Deloitte within its specialist unit for valuation and financial modelling, described having over thirty years of experience in the valuation and financial analysis of companies, financial instruments, and intangible assets. He had also carried out numerous valuations in contexts such as acquisitions, restructurings, disputes, and provided expert testimony in courts and arbitration proceedings.
Lindqvist’s assignment was to review and assess the calculations carried out by Mikael Runsten, the previous witness, and to present Deloitte’s own analysis of the potential economic benefit associated with that profit. Like Runsten, he gave a presentation to the court. The presentation was structured in four main parts: an introduction to the case, a review of Runsten’s calculations, Deloitte’s own calculations, and concluding remarks. Lindqvist stated that his task was to evaluate these calculations and assess whether the methods and assumptions used by Runsten were appropriate.
He then summarized Runsten’s methodology. According to Lindqvist, Runsten presented several different approaches to calculating the value of the alleged economic advantage. One method involved calculating the value growth of the original profit based on an assumed return on equity. A second method was based on the actual development of Lundin Petroleum’s share price, where the original profit was translated into a hypothetical ownership share in the company and then valued according to the subsequent development of the company’s market capitalization. The judge interrupted and asked if Lindqvist could focus on the first approach, since that was the basis for the prosecution’s claim. Counsel for the company, however, countered that the other approaches were still relevant since the prosecution had also presented them as grounds for reasonableness. The prosecution confirmed this, and Lindqvist continued his presentation.
Lindqvist’s third approach involved an alternative calculation based on borrowing costs. He did not present this approach in his presentation to the court, but it was part of his report. Lindqvist emphasized that these approaches all relied on different assumptions about how the original profit should be interpreted financially and how it should be assumed to develop over time, according to Runsten. Runsten said that this is the only approach where the results are not completely inaccurate and that it has a connection to what the profit actually was used for, which is paying of loans. According to the end of year report, the profit was used to pay off loans held by French subsidiaries.
According to Lindqvist, the key issue in assessing the alleged economic advantage was determining how the original profit actually affected the company’s financial position and whether it could reasonably be assumed to have generated the kinds of returns suggested in Runsten’s calculations. Lindqvist argued that Runsten’s methods involve significant hypothetical assumptions when in fact there was no reason to speculate since the money was used to pay off loans, as shown in the annual report. He also questioned the idea that the profit should be treated as if it had been invested as equity capital generating returns comparable to those achieved by shareholders through increases in share prices. He noted that the legal claim for confiscation was directed at the company itself rather than at its shareholders, and therefore the analysis should focus on the financial effect on the company rather than on hypothetical returns to investors.
Lindqvist also discussed the importance of the period chosen for the calculations. He argued that the relationship between the original profit and any subsequent financial effects becomes weaker over time, meaning that calculations extending over very long periods may significantly overstate the value of any economic advantage. In his view, using a long period of time with high assumed rates of return can produce extremely large figures that may not reflect the actual financial benefit obtained by the company.
In addition, Lindqvist emphasized that certain financial effects identified in the case, such as reduced interest payments following the use of sale proceeds to repay loans, should be considered with regards to tax effects. Because interest payments are generally tax-deductible, any reduction in interest costs would also reduce the company’s tax deductions, meaning that the net economic benefit would be smaller than the gross interest savings. According to Lindqvist, this was an additional factor to be considered when estimating the financial advantage associated with the transaction.
Lindqvist then presented Deloitte’s own calculations and compared them with those prepared by Runsten. With Deloittes’s calculations, the value of the economic benefit was 828 million SEK after five years. These calculations were intended to illustrate how different methodological assumptions can lead to substantially different estimates of the economic advantage derived from the original profit. The comparison showed that the figures produced by Runsten were significantly higher because they relied on assumptions about long-term capital growth and share price development. Lindqvist argued that a more cautious approach focusing on the direct financial effects for the company would result in substantially lower estimates.
In his concluding remarks, Lindqvist reiterated that the value of the alleged economic advantage depends heavily on the assumptions used in the calculations, particularly with regard to the relevant time period, the assumed rate of return, and the financial perspective adopted. He emphasized that analyses based on shareholder returns or long-term market developments may not accurately reflect the economic benefit actually obtained by the company itself and that there is no reason to speculate on what the profit was used for. The profit was used to pay off loans. According to Lindqvist, any assessment of the potential confiscation amount should therefore carefully consider the underlying assumptions and focus on the direct financial impact on the company rather than on hypothetical investment outcomes.
The prosecution’s questions to Lindqvist
After a long break, the prosecution started their interrogation of Lindqvist. Prosecutor Martina Winslow started by asking Lindqvist if he thought that he thought that 728 million SEK are worth 828 million after five years, in accordance with his calculations. Runsten said that no, 828 million is the original 728 million plus interest.
Winslow asked whether the company had used the funds effectively when it chose to repay loans rather than investing them to create additional value. Lindqvist replied that his analysis focused on what had actually occurred. The company had used the profit to pay back loans, and he had not looked into hypothetical alternative uses of the money.
The examination then turned to the valuation methods used by the prosecution’s expert, Mikael Runsten. Winslow asked Lindqvist to clarify why he had described Runsten’s methods as reflecting a “shareholder perspective.” Lindqvist explained that Runsten’s calculations focused on how the profit might affect shareholder returns, for example through changes in the share price, while his own analysis focused on the financial effects for the company itself. He said that the relationship between company profits and shareholder value is not one-to-one. Winslow also asked about Runsten’s argument that the profit strengthened the company’s financial position and could function as a form of financial “superpower” by increasing its borrowing capacity. Lindqvist agreed that additional capital is not a disadvantage and may improve borrowing possibilities. However, he said that it is not possible to calculate how much it contributed to the company’s share value over time.
The prosecutor then referred to company statements from 2003 indicating that the sale of Block 5A had strengthened the company’s financial position and enabled future acquisitions. Lindqvist acknowledged that the company had expressed intentions to pursue investments but that no immediate acquisition followed the transaction and that the company instead paid back loans.
Lindqvist was asked to clarify his position and confirmed that the company used the proceeds to pay back loans and later financed new investments through new borrowing. While he did not exclude that the profit may have had some positive effect on the company’s financial position, he maintained that it was not possible to determine the extent of any connection between the original profit and later acquisitions.
No further questions were asked by the company’s counsel.
The prosecution’s questions to Runsten
Mikael Runsten, who had been present during Lindqvist’s presentation was then asked to return to the stand. Prosecutor Martina Winslow asked if Lindqvist’s presentation had made Runsten to change his conclusions. Runsten replied that it had not and that they are obviously disagreeing of how they should view the 720 million SEK and how it was used.
Runsten said that one central issue was Lindqvist’s view that Runsten had adopted a “shareholder perspective,” while Lindqvist had taken a “company perspective.” Runsten disagreed with this and explained that his analysis also considered the company but took into account the stakeholders surrounding it. In his view, it was relevant to consider who ultimately benefits from a profit and who would bear the loss if that profit were confiscated.
He emphasized that the key financial effect of the transaction was the increase in the company’s equity. Without equity, a company cannot obtain financing. Referring to earlier examples comparing corporate and personal finance, he explained that although loan repayments temporarily reduce both cash holdings and debt, the strengthened equity remains. When a company later seeks new financing, the level of equity is an important factor in determining its borrowing capacity.
Runsten also referred to the company’s stated strategy to prioritize growth rather than dividends, arguing that this indicated that the company relied on maintaining strong equity in order to expand. While it was correct that the company used the proceeds to repay loans, he noted that the company later took on new loans, which in his view illustrated the importance of equity as a form of “financial muscle.” He then asked the judge if he could ask a rhetorical question but the judge replied that no, only the prosecution asks questions. Runsten then criticized Lindqvist’s valuation approach, noting that Lindqvist’s calculation of 828 million for the original 720 million profit implied an annual return of roughly 0.9 percent over a period of 15 to 18 years, which Runsten said was lower than inflation and therefore unrealistic.
To demonstrate how the sale increased equity, Runsten used Lego blocks. An orange block represented equity, which was strengthened by the sale. Even after the company repaid loans, the strengthened equity position remained and continued to support the company’s financial capacity. He noted that the company did not distribute dividends for many years, which he argued further indicated that maintaining strong equity was considered important for its expansion strategy.
Finally, Runsten commented on Lindqvist’s use of a risk-free interest rate in his calculations. Runsten argued that such a rate is typically used in accounting contexts when calculating provisions and liabilities, where the objective is to avoid underestimating obligations. In his view, applying such a conservative rate in this context resulted in an artificially low estimate of the economic advantage.
The company’s questions to Runsten
The company’s attorney then questioned Runsten and referred to a slide in his presentation illustrating a hypothetical scenario in the income statement in which the proceeds from the transaction were used to reduce debt. Runsten explained that, according to the 2003 annual report, the profit from the transaction was recorded in the group accounts rather than in the parent company, since the transaction had been carried out by another company within the corporate group.
The attorney then noted that while the parent company did not hold the relevant debt, another company in the group had long-term liabilities exceeding SEK 1 billion. Runsten confirmed this. When asked whether interest costs would likely have been higher had the loans not been repaid, Runsten agreed. The attorney also said f that while equity in the parent company decreased, equity elsewhere in the group increased by approximately SEK 900 million as a result of the transaction. Runsten confirmed that the group had reported a profit of roughly that amount and not a loss.
The questioning then turned to tax considerations. The attorney said that interest expenses are usually tax-deductible. Runsten responded that this is generally the case, although it may depend on the jurisdiction. When asked about transferring profits within a corporate group, Runsten explained that transfers between Swedish companies through dividends are relatively straightforward, whereas transfers from foreign subsidiaries may require additional steps depending on the corporate structure. Asked whether distributing profits through several subsidiaries up to the parent company could trigger taxation, Runsten replied that it might, but he was not certain of the exact tax implications.
With this, the questioning of Runsten was concluded. Mats Lindqvist was recalled to the stand and asked about an internal memo showcasing the company structure. The company’s attorney said that this was part of their presentation of the case, and the judge apologised. “I hope you can understand that it has been a few years.” The judge then said that the following day Jodi Anhorn would be heard and this would be the last witness of the trial. “It is a little ceremonial.”
Day three – The witness of Jodi Anhorn
The final witness before closing arguments was Jodi Anhorn, a petroleum economist and valuation expert specializing in the economic evaluation and valuation of oil and gas assets. Anhorn started the day with a presentation about the valuation of Block 5A in 2003. He explained that the true motivations and internal assumptions behind an acquisition are generally known only to the buyer, but that industry standards allow experts to assess how oil and gas assets are typically valued at the time of a transaction.
According to the analysis, most of the value of Block 5A at the time of the sale derived from the discovered and commercially viable Thar Jath oil field. Other parts within the block, like roads, were considered to have only limited value at that stage. The value of the concession had gradually increased as exploration activities were completed and the company’s obligations under the Exploration and Production Sharing Agreement (EPSA), such as seismic surveys and drilling requirements, were fulfilled. These activities reduced risk for a potential buyer and therefore increased the asset’s attractiveness.
Anhorn stated that the valuation of Block 5A depended primarily on the proven resources in the Thar Jath field and the reduced development risks resulting from completed exploration work and contractual cost-recovery mechanisms.
Personal details
The day concluded with some final formalities before closing arguments. Judge Zander noted that neither of the defendants had any prior convictions and thus both had clean criminal records. After this, the trial will take a break for a few weeks as the prosecution prepares their closing arguments.
