Frontline Management acted properly in the dismissal of a veteran employee over spreading insider information, a Norwegian court has found.
But Oslo District Court judge Ellen Haug-Svendsen found much to criticise in the company's own control of insider information and its protection of employee privacy. The court also threw out allegations that long-serving bookkeeper Sophia Ronaas had failed to prevent a suspected embezzlement.
Ronaas, 61, was sacked by former chief executive Robert Hvide Macleod in July 2020. She brought the suit last September and a three-day trial was held in May, at which much of the evidence presented came from employees' email inboxes.
Ronaas had argued that her communications with then Frontline Management newbuildings director Bjorn Westerberg were between colleagues and therefore no violation of securities law.
But in their unanimous decision, the three-judge panel rejected that argument and found that Westerberg was not entitled to the information Ronaas shared with him.
It found that she had also violated an uncodified aspect of Norwegian employment law, the duty of loyalty, which limits an employee's freedom to say unfavourable things about his or her employer.
It also said Ronaas had failed to support her contention that McLeod had fired her because he bore a grudge for her criticisms of his running of the company.
But the court found Frontline Management partly to blame for the information leakage.
It said non-insider Ronaas should never have had access to so much sensitive information in the first place.
An open-plan office where decisions are made for multiple stock-listed John Fredriksen-controlled companies makes such leaks harder to prevent and puts more responsibility on the employer to prevent them, the judge found.
Frontline Management also failed to live up to Norwegian privacy protections in its treatment of employee emails, and the court ordered it to pay Ronaas compensation of NOK 100,000 ($11,050).
Looking ahead
Fredriksen did not respond to a request for comment but Lars Barstad, acting chief executive of Frontline Management, expressed relief.
“Frontline is pleased that the court came to the same conclusion as us, both in respect of the individual reasons and the totality, that Frontline had clear grounds for dismissal," he wrote in a statement to TradeWinds.
"If you are a centrally placed employee in an organisation, handling sensitive information such as salaries, sickness benefits and pensions, a principal requirement is to have integrity and show discretion.
"This case has been a great burden for our organisation, and the misconduct discovered was totally alien to the Frontline business culture. It is with relief that we now can look ahead. An employee must always be protected, but in some situations the employer should have the right to take action quickly and professionally, when called for.”
Ronaas' lawyer, Tonje Liavaag, was not available for comment this week.
But Ronaas' husband, Torstein Ronaas, told Norwegian business daily Dagens Naeringsliv that no decision had been made about an appeal.
Aspects of the case still remain obscure.
Frontline Management had originally grounded the dismissal partly on its contention that Ronaas should have discovered a decade-long irregularity in third-party commission payments from Norwegian consultant Treade.
The Fredrikstad-based company had a decades-long arrangement with Fredriksen to work on his behalf with other suppliers of equipment for newbuildings.
But the court rejected that criticism of Ronaas, saying that Frontline Management had failed to provide sufficient information to the court and to the employee about the Treade case.
The 37-page court ruling contains an extensive series of email exchanges between Ronaas and Westerberg, detailing a number of significant events in stock-listed companies before they were publicly disclosed.
These include Frontline Ltd's sale of its share in Orion Tankers to partner Nordic American Tankers in 2012; the merger in 2015 of Frontline Ltd and Frontline 2012 Ltd; the departures of Jens Martin Jensen in 2015 and of Herman Billung in 2016; the failed bid for DHT Holdings in 2017; and the $675m purchase of Trafigura's suezmax fleet in 2019.
The judge cited the last-named event as a clear instance of significant insider information, as it led to a 5.3% jump in the share price of Frontline Ltd.
The ruling is also rich in office gossip that might not be material to investors, ranging from corporate factions and intrigues to aspects of Fredriksen's love life and even the secondhand sale of his NOK 1.8m (then about $300,000) Mercedes to former lieutenant Oscar Spieler for NOK 600,000.
