IT Factory

The Extraordinary Rise And Fall Of Denmark's IT Factory

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Last September, Danish Computerworld awarded IT Factory, a provider of CRM, HRM and Business Intelligence add-on solutions based on a SaaS delivery model, with the prestigious “Denmark’s Best IT-company 2008″. This week, the company has been declared bankrupt and its managing director Stein Bagger went missing in Dubai while under scrutiny by the police and Interpol.

Update: Bagger was arrested in California December 6, more information here.

The remarkable story is all over the Danish press but has remained largely unnoticed outside of the country so far.

Stein Bagger apparently got his hands really dirty: he’s wanted by the Danish police by Interpol for financial fraud and a possible link to an assault on a business man (alledgedly executed by members of the Hell’s Angels, a group he was connected to somehow, but that’s not sure), although charges haven’t been pressed so far. Nobody has seen Bagger since last Thursday, when he disappeared somewhere in Dubai, where he was attending a business conference in the company of his wife and child (his wife is also the one who reported his disappearance).

The Danish press dug up his background after Computerworld did some research together with blogger Dorte Toft in the context of the award that was handed out to IT Factory a couple of weeks ago, and it turns out Bagger has connections to two Swedish business men (Carl Freer and Mikael P. Ljungman), who have been both convicted of fraud in the past. Further investigation is still being carried out.

Reporters also found out Bagger had been renting a secret office in a conference hotel since two weeks near the IT Factory offices, which he reportedly used to forge documents and signatures in order to keep the massive-scale fraud going (it concerns about half a billion Danish Kroner or $85 million). Overall, sources assess that up to 90 percent of IT Factory’s turnover had been based on non-existing or false contracts. There’s also talk of a scam where non-existing IT equipment and other stuff was sold to leasing firms, and the cash was sent off to shady offshore companies.

The fraud scandal has many corporations and banks in Denmark licking their wounds. One of the victims is international cycling team CSC-Saxo Bank, led by Bjarne Riis, who counted on IT Factory as one of their main sponsors.

Most of the information above comes from a tipster and translated versions of Danish articles. We’ll update this post whenever we get more information.

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