"It was worth coming down here just to see you with that paper in your hand."

Blomkvist said nothing. Borg and Blomkvist had known each other for fifteen years. They had worked together as cub reporters for the financial section of a morning paper. Maybe it was a question of chemistry, but the foundation had been laid there for a lifelong enmity. In Blomkvist's eyes, Borg had been a third-rate reporter and a troublesome person who annoyed everyone around him with crass jokes and made disparaging remarks about the more experienced, older reporters. He seemed to dislike the older female reporters in particular. They had their first quarrel, then others, and anon the antagonism turned personal.

Over the years, they had run into each other regularly, but it was not until the late nineties that they became serious enemies. Blomkvist had published a book about financial journalism and quoted extensively a number of idiotic articles written by Borg. Borg came across as a pompous ass who got many of his facts upside down and wrote homages to dot-com companies that were on the brink of going under. When thereafter they met by chance in a bar in Soder they had all but come to blows. Borg left journalism, and now he worked in PR - for a considerably higher salary - at a firm that, to make things worse, was part of industrialist Hans-Erik Wennerstrom's sphere of influence.

They looked at each other for a long moment before Blomkvist turned on his heel and walked away. It was typical of Borg to drive to the courthouse simply to sit there and laugh at him.

The number 40 bus braked to a stop in front of Borg's car and Blomkvist hopped on to make his escape. He got off at Fridhemsplan, undecided what to do. He was still holding the judgement document in his hand. Finally he walked over to Kafe Anna, next to the garage entrance leading underneath the police station.

Half a minute after he had ordered a caffe latte and a sandwich, the lunchtime news came on the radio. The story followed that of a suicide bombing in Jerusalem and the news that the government had appointed a commission to investigate the alleged formation of a new cartel within the construction industry.

Journalist Mikael Blomkvist of the magazine Millennium was sentenced this morning to 90 days in gaol for aggravated libel of industrialist Hans-Erik Wennerstrom. In an article earlier this year that drew attention to the so-called Minos affair, Blomkvist claimed that Wennerstrom had used state funds intended for industrial investment in Poland for arms deals. Blomkvist was also sentenced to pay 150,000 SEK in damages. In a statement, Wennerstrom's lawyer Bertil Camnermarker said that his client was satisfied with the judgement. It was an exceptionally outrageous case of libel, he said.

The judgement was twenty-six pages long. It set out the reasons for finding Blomkvist guilty on fifteen counts of aggravated libel of the businessman Hans-Erik Wennerstrom. So each count cost him ten thousand kronor and six days in gaol. And then there were the court costs and his own lawyer's fee. He could not bring himself to think about all the expenses, but he calculated too that it might have been worse; the court had acquitted him on seven other counts.

As he read the judgement, he felt a growing heaviness and discomfort in his stomach. This surprised him. As the trial began he knew that it would take a miracle for him to escape conviction, and he had become reconciled to the outcome. He sat through the two days of the trial surprisingly calm, and for eleven more days he waited, without feeling anything in particular, for the court to finish deliberating and to come up with the document he now held in his hand. It was only now that a physical unease washed over him.

When he took a bite of his sandwich, the bread seemed to swell up in his mouth. He could hardly swallow it and pushed his plate aside.

This was the first time that Blomkvist had faced any charge. The judgement was a trifle, relatively speaking. A lightweight crime. Not armed robbery, murder, or rape after all. From a financial point of view, however, it was serious - Millennium was not a flagship of the media world with unlimited resources, the magazine barely broke even - but the judgement did not spell catastrophe. The problem was that Blomkvist was one of Millennium's part owners, and at the same time, idiotically enough, he was both a writer and the magazine's publisher. The damages of 150,000 kronor he would pay himself, although that would just about wipe out his savings. The magazine would take care of the court costs. With prudent budgeting it would work out.

He pondered the wisdom of selling his apartment, though it would break his heart. At the end of the go-go eighties, during a period when he had a steady job and a pretty good salary, he had looked around for a permanent place to live. He ran from one apartment showing to another before he stumbled on an attic flat of 700 square feet right at the end of Bellmansgatan. The previous owner was in the middle of making it liveable but suddenly got a job at a dot-com company abroad, and Blomkvist was able to buy it inexpensively.

He rejected the original interior designer's sketches and finished the work himself. He put money into fixing up the bathroom and the kitchen area, but instead of putting in a parquet floor and interior walls to make it into the planned two-room apartment, he sanded the floor-boards, whitewashed the rough walls, and hid the worst patches behind two watercolours by Emanuel Bernstone. The result was an open living space, with the bedroom area behind a bookshelf, and the dining area and the living room next to the small kitchen behind a counter. The apartment had two dormer windows and a gable window with a view of the rooftops towards Gamla Stan, Stockholm's oldest section, and the water of Riddarfjarden. He had a glimpse of water by the Slussen locks and a view of City Hall. Today he would never be able to afford such an apartment, and he badly wanted to hold on to it.

But that he might lose the apartment was nothing beside the fact that professionally he had received a real smack in the nose. It would take a long time to repair the damage - if indeed it could ever be repaired.

It was a matter of trust. For the foreseeable future, editors would hesitate to publish a story under his byline. He still had plenty of friends in the business who would accept that he had fallen victim to bad luck and unusual circumstances, but he was never again going to be able to make the slightest mistake.

What hurt most was the humiliation. He had held all the trumps and yet he had lost to a semi-gangster in an Armani suit. A despicable stock-market speculator. A yuppie with a celebrity lawyer who sneered his way through the whole trial.

How in God's name had things gone so wrong?

The Wennerstrom affair had started out with such promise in the cockpit of a thirty-seven-foot Malar-30 on Midsummer Eve a year and a half earlier. It began by chance, all because a former journalist colleague, now a PR flunky at the county council, wanted to impress his new girlfriend. He had rashly hired a Scampi for a few days of romantic sailing in the Stockholm archipelago. The girlfriend, just arrived from Hallstahammar to study in Stockholm, had agreed to the outing after putting up token resistance, but only if her sister and her sister's boyfriend could come too. None of the trio from Hallstahammar had any sailing experience, and unfortunately Blomkvist's old colleague had more enthusiasm than experience. Three days before they set off he had called in desperation and persuaded him to come as a fifth crew member, one who knew navigation.

Blomkvist had not thought much of the proposal, but he came around when promised a few days of relaxation in the archipelago with good food and pleasant company. These promises came to naught, and the expedition turned into more of a disaster than he could have imagined. They had sailed the beautiful but not very dramatic route from Bullando up through Furusund Strait at barely 9 knots, but the new girlfriend was instantly seasick. Her sister started arguing with her boyfriend, and none of them showed the slightest interest in learning the least little thing about sailing. It quickly became clear that Blomkvist was expected to take charge of the boat while the others gave him well-intentioned but basically meaningless advice. After the first night in a bay on angso he was ready to dock the boat at Furusund and take the bus home. Only their desperate appeals persuaded him to stay.

At noon the next day, early enough that there were still a few spaces available, they tied up at the visitors' wharf on the picturesque island of Arholma. They had thrown some lunch together and had just finished when Blomkvist noticed a yellow fibreglass M-30 gliding into the bay using only its mainsail. The boat made a graceful tack while the helmsman looked for a spot at the wharf. Blomkvist too scanned the space around and saw that the gap between their Scampi and an H-boat on the starboard side was the only slot left. The narrow M-30 would just fit. He stood up in the stern and pointed; the man in the M-30 raised a hand in thanks and steered towards the wharf. A lone sailor who was not going to bother starting up the engine, Blomkvist noticed. He heard the rattle of the anchor chain and seconds later the main came down, while the skipper moved like a scalded cat to guide the rudder straight for the slot and at the same time ready the line from the bow.

Blomkvist climbed up on the railing and held out a hand for the painter. The new arrival made one last course correction and glided perfectly up to the stern of the Scampi, by now moving very slowly. It was only as the man tossed the painter to Blomkvist that they recognised each other and smiled in delight.

"Hi, Robban. Why don't you use your engine so you don't scrape the paint off all the boats in the harbour?"

"Hi, Micke. I thought there was something familiar about you. I'd love to use the engine if I could only get the piece of crap started. It died two days ago out by Rodloga."

They shook hands across the railings.

An eternity before, at Kungsholmen school in the seventies, Blomkvist and Robert Lindberg had been friends, even very good friends. As so often happens with school buddies, the friendship faded after they had gone their separate ways. They had met maybe half a dozen times in the past twenty years, the last one seven or eight years ago. Now they studied each other with interest. Lindberg had tangled hair, was tanned and had a two-week-old beard.

Blomkvist immediately felt in much better spirits. When the PR guy and his silly girlfriend went off to dance around the Midsummer pole in front of the general store on the other side of the island, he stayed behind with his herring and aquavit in the cockpit of the M-30, shooting the breeze with his old school pal.

Sometime that evening, after they had given up the battle with Arholma's notorious mosquitoes and moved down to the cabin, and after quite a few shots of aquavit, the conversation turned to friendly banter about ethics in the corporate world. Lindberg had gone from school to the Stockholm School of Economics and into the banking business. Blomkvist had graduated from the Stockholm School of Journalism and devoted much of his professional life to exposing corruption in the banking and business world. Their talk began to explore what was ethically satisfactory in certain golden parachute agreements during the nineties. Lindberg eventually conceded there were one or two immoral bastards in the business world. He looked at Blomkvist with an expression that was suddenly serious.

"Why don't you write about Hans-Erik Wennerstrom?"

"I didn't know there was anything to write about him."

"Dig. Dig, for God's sake. How much do you know about the AIA programme?"

"Well, it was a sort of assistance programme in the nineties to help industry in the former Eastern Bloc countries get back on their feet. It was shut down a couple of years ago. It's nothing I've ever looked into."

"The Agency for Industrial Assistance was a project that was backed by the state and administered by representatives of about a dozen big Swedish firms. The AIA obtained government guarantees for a number of projects initiated in agreement with the governments in Poland and the Baltics. The Swedish Trade Union Confederation, LO, also joined in as a guarantor that the workers' movement in the East would be strengthened as well by following the Swedish model. In theory, it was an assistance project that built on the principle of offering help for self-help, and it was supposed to give the regimes in the East the opportunity to restructure their economies. In practice, however, it meant that Swedish companies would get state subventions for going in and establishing themselves as part owners in companies in Eastern European countries. That goddammed minister in the Christian party was an ardent advocate of the AIA, which was going to set up a paper mill in Krakow and provide new equipment for a metals industry in Riga, a cement factory in Tallinn, and so on. The funds would be distributed by the AIA board, which consisted of a number of heavyweights from the banking and corporate world."

"So it was tax money?"

"About half came from government contributions, and the banks and corporations put up the rest. But it was far from an ideal operation. The banks and industry were counting on making a sweet profit. Otherwise they damn well wouldn't have bothered."

"How much money are we talking about?"

"Hold on, listen to this. The AIA was dealing primarily with big Swedish firms who wanted to get into the Eastern European market. Heavy industries like ASEA Brown Boveri and Skanska Construction and the like. Not speculation firms, in other words."

"Are you telling me that Skanska doesn't do speculation? Wasn't it their managing director who was fired after he let some of his boys speculate away half a billion in quick stock turnovers? And how about their hysterical property deals in London and Oslo?"

"Sure, there are idiots in every company the world over, but you know what I mean. At least those companies actually produce something. The backbone of Swedish industry and all that."

"Where does Wennerstrom come into the picture?"

"Wennerstrom is the joker in the pack. Meaning that he's a guy who turns up out of the blue, who has no background whatsoever in heavy industry, and who really has no business getting involved in these projects. But he has amassed a colossal fortune on the stock market and has invested in solid companies. He came in by the back door, so to speak."