Peter Brixtofte

Brixtofte made headlines with a highly untraditional sale-and-lease-back model where the municipality sold buildings and facilities to private companies and rented them back. Due to various national tax issues this was highly advantageous for both parties. This scheme allowed the municipality to have one of the lowest tax rates in Denmark at the same time as spending a huge amount of money on various welfare programs. Every child in school was given a high-end computer and the elderly were offered a free annual trip to a foreign holiday destination. A lot of prestigious building projects were initiated such as a sports arena and marina completely out of proportion to what one would expect from a city of this size. Due to the tax issues of the sale-and-lease-back model the expenses for these programs were largely covered by all taxpayers of Denmark, most of whom got no benefit from the programs. For a long time, the legal status of the scheme was unclear.

In February 2002 several scandals surrounding his administration were revealed in the media. The first headlines involved exceptionally high spending in his administration. It was claimed that he routinely drank luxury red wine (at a cost of around $1,200 USD per bottle) on the public expense account. Furthermore, the wine was bought at a local restaurant in which Brixtofte was a shareholder. Municipal employees reported that the charismatic mayor had over years shown increasing signs of alcoholism and established an autocratic, timid climate at the town hall. Council members said he had attempted to prevent them from investigating his spending.

Multiple other incidents surfaced including the so-called "sponsor case" alleging that Brixtofte had made deals involving his municipality paying deliberate overprices for the welfare services bought from private companies who in return would sponsor the local football team (in which Brixtofte had a personal interest). Perhaps the most serious allegation accused Brixtofte of having ordered a secretary to purposely delay the payment of an invoice by one day so that Svend Petersen - a friend of Brixtofte - earned 325,000 DKR (57,000 USD) in compensation for the late payment. Svend Petersen has previously been found guilty in fraud in an unrelated case. During the initial investigations, several documents important to the case(s) mysteriously disappeared from the town hall.

Eventually the investigations resulted in two criminal cases being raised against Brixtofte who pleaded not guilty in both. On 20 June 2006 Brixtofte was found guilty in the sponsor case (generally considered the smaller of the two) and was sentenced to jail for 2 years.[2] He appealed but this was rejected on 8 February 2007. His lawyer then announced an appeal to the Supreme Court which would, however, only be granted in exceptional circumstances and can only affect the length of the sentence, not the guilty verdict. The appeal was granted by Procesbevillingsnævnet on 16 August 2007.[3]

In the other legal case he was also found guilty on 10 April 2007. He was sentenced an additional 2 years of unconditional prison but appealed right away. The prosecutor also appealed for a higher sentence. Brixtofte's right-hand man, Leif Frimand Jensen, was also sentenced two years in prison, but it was made conditional due to his bad health. He also appealed. Twelve former and current councilmen were also charged, but risked only fines.[4]

The welfare and leaseback programs got an abrupt ending as well. Eventually rulings were made on the tax issues making the sale-and-lease-back model less favorable. This as well as the bad media coverage of Brixtofte meant that investors lost faith in the administration. This caused the collapse of various plans that should have kept the scheme going, such as the sale of certain building sites. On top of that came increasing rent costs from the previous sales and eventually the municipality was forced to abandon the extraordinary welfare programs and dramatically raise its taxes. It went from being one of the cheapest to one of the most expensive municipalities in Denmark.