Denmark's first major prosecution for systematic wage fraud against a municipality has exposed critical vulnerabilities in public contract oversight. A 44-year-old CEO from Funen stands accused of forging payslips to deceive Odense Municipality, in a case that could reshape how Danish cities manage subcontractors and protect foreign workers.
"We looked at the documentation and thought, there are probably some trying to circumvent the wage clauses and cheating with the documentation, and it looks like we are being deceived," said Cecilie Schwartz Førby, procurement and contract manager for Odense Municipality. Her statement captures the municipal frustration at discovering a contractor, Dan-Forst, had allegedly fabricated documents to show its Polish employees were receiving agreed union-level wages when they were not.
The case centers on a contract for maintaining green spaces at schools and public institutions across Odense. The main contractor, Tolstrup Anlægsgartnere, hired Dan-Forst for the work, believing the subcontractor complied with municipal wage requirements. The subsequent investigation revealed a starkly different reality, leading to fraud charges against the Dan-Forst director and significant financial fallout.
A Systematic Deception Unravels
The fraud was not a simple clerical error. According to the charge sheet, the director systematically manipulated wage and timesheet documents to create the illusion of compliance. Odense Municipality's control unit became suspicious when the paperwork submitted by Dan-Forst did not match the information provided by the company's own employees during checks. This discrepancy triggered a deeper investigation, uncovering what prosecutors now label "particularly gross fraud."
The financial motive was clear. The prosecution alleges the director sought to avoid a potential fine of 560,000 Danish kroner for non-compliance with the municipal wage agreement. By forging the documents, he aimed to secure continued payment from the main contractor and the municipality while paying his workers substantially less. About ten Polish employees were affected by the scheme.
The Ripple Effect of Broken Trust
The consequences extend far beyond the accused director, who now risks up to eight years in prison. Christoffer Lund, director of Tolstrup Anlægsgartnere, told reporters he is "extremely annoyed" that his company has incurred unexpected additional costs of one million kroner due to the subcontractor's actions. This highlights the financial risk borne by primary contractors when their supply chain fails.
For Odense Municipality, the case is a serious breach of trust and a failure of the safeguards built into public procurement. Municipal contracts in Denmark routinely include strict social clauses, known as arbejdsklausuler, designed to ensure fair wages and working conditions, especially for posted workers from other EU countries. This case demonstrates how those clauses can be undermined by fraudulent documentation.
"This is the first case of its kind in Denmark and could have far-reaching consequences," legal observers noted in the charge sheet. The precedent set by this prosecution will be closely watched by municipalities nationwide, likely leading to stricter verification processes and more rigorous audits of subcontractor documentation.
A Warning to Danish Business Practices
From a business and trade perspective, this scandal strikes at the heart of Denmark's reputation for transparent and fair commercial practices. Copenhagen and the wider Øresund region market themselves as hubs of ethical business conduct. Cases like this threaten that brand, suggesting loopholes that unethical operators can exploit, particularly in sectors reliant on migrant labor like construction and landscaping.
The Danish model relies heavily on trust and self-reporting within a regulated framework. This incident shows the model's weakness when a bad actor intentionally provides false data. It will force procurement chiefs in Copenhagen, Aarhus, and Odense to re-evaluate their monitoring systems. Relying on paper audits is clearly insufficient; physical checks and direct employee interviews, as done here, become essential.
Furthermore, it exposes the financial pressures in competitive bidding for public contracts. Companies submitting the lowest bids may sometimes be tempted to cut corners on labor costs to maintain profitability, using subcontractors as a layer of insulation from responsibility. This case proves that insulation is thin, and liability can travel up the chain, hitting reputable companies like Tolstrup with major unplanned costs.
The Human Cost and Legal Landscape
While the financial figures and legal charges dominate headlines, the human impact on the approximately ten Polish workers is significant. They performed labor for a public contract under the expectation of a certain wage, only to be paid less. Their situation underscores the vulnerability of mobile EU workers, who may be reluctant to report abuses for fear of losing their jobs.
Denmark has stringent laws against social dumping—the practice of using cheaper foreign labor to undercut local wages and standards. This prosecution under fraud statutes, with an eight-year maximum sentence, signals a new aggressive approach. Authorities are moving beyond administrative fines and directly targeting company leadership with serious criminal charges.
The accused director has declined to comment on the case. His silence is typical in ongoing Danish legal proceedings but leaves unanswered questions about the duration and full scope of the alleged scheme. Investigators will have to prove intent and systematic action, a higher bar than proving simple contractual non-compliance.
A Turning Point for Municipal Procurement?
This case arrives at a time of heightened focus on supply chain ethics and corporate social responsibility. For Danish municipalities, which are major drivers of local economic activity, the response will be critical. Expect to see several developments:
First, a technological shift. Digital wage and hour reporting systems, which are harder to falsify than paper documents, may become a mandatory requirement for public contracts. Some Danish unions have long advocated for such digital logbooks.
Second, increased liability for primary contractors. Municipalities may tighten clauses making firms like Tolstrup directly responsible for their subcontractors' compliance, including financial penalties and contract termination for violations.
Third, more random and unannounced site inspections by municipal control units, with mandatory private interviews of workers to cross-check provided documentation.
Finally, a potential blacklisting mechanism. Companies and directors convicted of such fraud could be barred from bidding on public contracts for a significant period, a severe commercial deterrent.
The Odense case is more than a local scandal; it is a stress test for Denmark's entire framework of ethical public procurement. As the trial proceeds, its outcome will send a powerful message: will cutting corners on worker pay now be treated not just as a contractual breach, but as a serious criminal enterprise? The answer will reshape cost calculations for contractors across the country and either reinforce or erode the hard-earned trust in Denmark's business environment.