A FINANCIAL scandal involving gigantic bonuses at the Swedish parent company of one of Southampton's biggest employers today took a new twist.

Skandia, which is based in Stockholm and is independent of the £1 billion UK arm headquartered here, has been engulfed by the biggest corporate scandal in 70 years.

Senior bosses in Sweden were paid £210m in uncapped bonuses under the so-called Wealthbuilder programme.

According to an independent investigation in 2003, some senior managers in Stockholm carried out "unsuitable, unethical and in some cases, probably illegal acts".

Now the company's former chairman Lars Ramqvist is to pay compensation after accepting moral responsibility.

Although not involved in the controversial Wealthbuilder programme, he offered to repay the equivalent of £169,000 on a no-fault basis.

The compensation is equal to fees Mr Ramqvist received as chairman of Skandia's board, its audit committee and its nominating committee.

The brunt of the allegations in 2002 were levelled at former chief executive Lars-Eric Petersson, who Skandia said removed the cap on bonus payouts, former finance chief Ulf Spang and Ola Ramstedt, the former head of the company's life insurance arm Skandia Liv.

Flawed auditing and a strong management unchecked by a weak board were blamed.

Skandia said neither Mr Ramqvist nor other company directors were aware of Petersson removing the bonuses cap.

Bjorn Bjornsson, vice chairman of Skandia's board, said: "Many people have asked whether Skandia's board at that time had any responsibility for the gigantic bonus payments.

"The legal investigation that Skandia commissioned in autumn 2004 shows that there are conditions to demand liability for damages from the former chairman.

"However a long drawn-out legal process would hardly benefit Skandia, which is why a settlement of this kind is good."

Mr Ramqvist said: "Neither I nor the other directors can accept any blame for this. However, as chairman of Skandia during the period in question I am willing to accept my moral responsibility for the events that occurred."

Skandia is looking to take legal action against its former auditors.

The scandal did not affect Southampton-based operations, which employs 1,500 people and provides financial services like pensions and life insurance.

A spokesman said that bonuses schemes enjoyed by staff in Southampton were subject to different accounting procedures to those in Sweden.