By Alistair Scrutton
STOCKHOLM (Reuters) - Revelations that Sweden's spy agency treated itself to a lavish James Bond-themed party have embarrassed the government in a country whose reputation as a model of rectitude has been sullied by a series of public spending scandals.
The party, which included 1,000 guests, casino tables, celebrity entertainers and a tuxedo-clad band playing Bond themes, cost 5.3 million crowns ($800,000), took place in June 2011 during a government austerity drive.
The affair is now dominating newspaper front-pages and television chat shows as well as being the talk of dinner parties and fodder for opposition politicians.
Dagens Nyheter newspaper first broke the story of the Bond party on Monday and has followed up with further juicy details.
It said Sapo, Sweden's spy agency, may have failed to put the event out to tender and claimed too much tax back, just as it faces possible cuts in its budget. The political opposition has called for an investigation.
Sapo chief Anders Thornberg said the agency had been "under pressure" after a sweeping reorganization as well as a suicide bombing in Stockholm by an Islamist militant in December 2010.
"We thought that we needed a special gathering for the whole security police team," Dagens quoted Thornberg as saying.
The Bond party scandal has produced much soul-searching in Sweden about whether the Scandinavian country is jettisoning such values as fairness and efficiency that earned it international respect and helped ensure the popularity of its high tax regime.
This is a country where one minister resigned in the 1995 after she was discovered to have bought some personal goods, including Toblerone chocolate, with her government credit card. It is widely known as the "Toblerone scandal."
It is the latest in a series of scandals that has embarrassed the centre-right government of Prime Minister Frederik Reinfeldt, beset by falling polls and a galvanized opposition as he tries to cut taxes and welfare spending.
Dagens Nyheter said the spy agency may have to cut 10 percent of its staff over the next three years in order to meet budget targets, casting the millions of crowns spent on a party in an even less-favorable light.
For critics, it is a sign that the market reforms of the last years have seeped into Sweden's once austere government bodies and led to a rise in the kind of lavish spending that some Swedes see more in keeping with large corporations.
"Public institutions look more these days at the culture of private sphere and the market," said Ulf Bjereld, professor of political science at Gothenburg University.
"Public institutions used to be more austere," Bjereld said.
He recalled the case of the wife of Prime Minister Tage Erlander, who famously returned some pencils labeled "property of the state office" after her husband died in 1985.
The Ministry of Enterprise is under investigation after reports that it failed to tender contracts out for a lavish Christmas party.
The Swedish Foundation of Strategic Research was forced to apologize for spending more than a million dollars destined for research on a party for 500 guests. The Swedish Agency for Economic and Regional Growth was also reported to have spent thousands of dollars on events such as ski trips and dinners.
Under pressure, Prime Minister Reinfeldt criticized senior civil servants. But he said the scandals should not be used as an excuse to reassert tight central government control.
"They are well paid and should know better," Reinfeldt told Dagens.
Morgan Johansson, a leading figure in the opposition Social Democrats, told Dagens Nyheter, the government must tighten control.
"I think it's called for the government to effect a major review of its authorities," he told Dagens. "The government has left authorities to their own devices".
(Additional reporting by Johan Ahlander; Ediitng by Angus MacSwan)