Pro Tips
Jun 20, 2025
The Earn-Out Fraud Allegations Explained
Unpack how Pandora allegedly fiddled numbers to cheat Nielsen out of his earn-out payment, leading to police investigations and a historic lawsuit. Key facts creators can use for hooks like "Cheated out of billions – now fighting back."
What is an Earn-Out Agreement?
An earn-out is a contractual provision in business acquisitions where part of the purchase price is paid based on the future performance of the acquired company. It aligns interests between buyer and seller.
In this case:
Jesper "Kasi" Nielsen's company (Kasi ApS) sold Pandora CWE to Pandora A/S in 2010.
Earn-out terms: Kasi ApS entitled to a significant share of Pandora CWE profits from 2010–2014 (with an additional multiplier for 2014).
Pandora CWE delivered strong results, yet Pandora reported cumulative losses of ~$64 million USD for CWE – resulting in zero earn-out payment.
The Core Allegation: Hidden Profits of ~$233 Million USD
Evidence indicates actual CWE profits were ~$233 million USD. Pandora allegedly manipulated accounts to conceal this and evade payment.
The Three Primary Manipulation Tactics
Fabricated Accounting Entries
~$300 million USD in profits shifted out of CWE via artificial adjustments.
These reduced CWE's books without impacting Pandora Group's overall financials.
Inventory Dumping and Write-Downs
Defective/returned goods from the entire Pandora Group transferred annually to CWE.
Written down to zero value – generating massive artificial losses exclusive to CWE.
Reclassification of Company Status
Post-Nielsen departure, CWE changed from subsidiary to distributor.
This enabled inflated purchase prices from the parent, further eroding reported profits.
Double Bookkeeping for Bonuses
"Shadow" internal accounts reflected true high profits – used to calculate executive bonuses.
External accounts (for earn-out purposes) showed losses.
Key Figures and Alleged Motive
Named Individuals: Former CFO Henrik Holmark and Business Development Director Thomas Ryge Mikkelsen (both previously with Axcel).
Motive: Coincided with private equity firm Axcel's 2014 sale of over 50% of Pandora shares. Revealing true profits would have triggered a large payout to Kasi (~40% of 2014 profits), potentially reducing Group results and share price during Axcel's profitable exit.
Key Timeline
2010–2014: Alleged manipulations occur.
2015–2021: Prolonged legal disputes; 2019 KPMG audit (fed manipulated data, Nielsen excluded) rules no payment owed.
2023: Whistleblowers, LinkedIn post, internal documents surface; 20,000+ hours of expert investigation.
June 2025: New arbitration claim filed for minimum ~$394 million USD + interest/penalties – total potential up to ~$1.7–1.8 billion USD.
Current (December 25, 2025): Arbitration active; Denmark's Economic Crime Unit (NSK) investigating, questioning Pandora personnel.
Pandora A/S denies all allegations, describing them as unfounded.
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