“There were a few of us in the wrong. But I am the chairperson, so I bear the responsibility. The mistake is in contravention of government guidelines,” Lars Westerberg said on Friday in response to the announcement of his departure.

Westerberg said that Friday’s developments and his resignation from the board had been on the cards for some time.

“This is nothing sudden. We have been discussing for several weeks how we should do and have now come to the conclusion it is better that I resign today, and that Vattenfall appoints a new chair,” he said.

Lars Gejrot will also leave his positions as head of human resources and a member of the group management. Kerstin Ahlfont will replace him as HR director and join the group management, according to the Vattenfall statement.

The background to the resignations of Gejrot and Westerberg is the agreement reached with the outgoing CEO Lars G. Josefsson, concerning a one-off compensation payment.

The secret agreement to pay Josefsson a year of his two year notice period in the form of a regular salary was brokered by Westerberg and Gejrot and has now been found to be in breach of government guidelines on remuneration.

The agreement was signed after the choice of new CEO Øystein Løseth as replacement for Westerberg in November 2009. This was a year before Josefsson’s contract expired on his sixtieth birthday and thus it was decided not to give him his notice and instead the pay off was worked out, without the approval of the board.

Vattenfall stated on Friday that it has reached an agreement with Josefsson for the repayment of the 12 million kronor ($1.9 million) that he had erroneously received by the end of March.

Øystein Løseth told journalists on Friday that he had no knowledge of the contract and that it was only discovered by the auditors when they performed a review.

Løseth then asked for an independent law firm to conduct a review of the process leading up to the agreement with Josefsson and underlined that the firm has begun work to tighten up its procedures.

Vattenfall’s owner, the Swedish government, decided to act to end Westerberg’s three year tenure as chairperson of the firm.

“It is the government’s view that this is completely unacceptable, and therefore we have chosen not to renew Lars Westerberg’s mandate as chairman of Vattenfall,” financial markets minister Peter Norman told journalists.

The remainder of the Vattenfall board retained the government’s confidence, Norman confirmed.