Phantom Ph.D.S

Refaat el Sayed seemed to come out of nowhere to become one of Sweden's most successful business executives. Born into a wealthy Egyptian family, he moved to Uppsala, near Stockholm, to study agricultural science in 1968. El Sayed attracted little attention until 1981, when he borrowed $5.3 million and bought a money-losing Swedish drug company called Fermenta. In four years he transformed it into a leading producer of antibiotics. His company's 1985 profits hit $43.2 million, and Sweden's national TV network honored him as the country's man of the year.

But last week el Sayed, 39, was a man in disgrace. After being accused of lying about his educational background, and then admitting that the charges were true, he resigned under pressure as president of Fermenta. As the scandal unfolded, the price of the company's stock fell from $36 to $18, generating a personal loss of more than $130 million for el Sayed.

His troubles began in November, when Bjorn Gillberg, a former professor at Sweden's Ultuna Agricultural University, read a FORTUNE profile of Fermenta. The story noted that el Sayed had earned a Ph.D. in microbiology at Uppsala University in 1973. In reality, el Sayed had been at Ultuna that year, working in Gillberg's lab. Gillberg investigated the discrepancy and discovered that el Sayed had also falsely claimed to have a Ph.D. in microbiology from the University of California, Davis.

Three weeks ago Gillberg publicly charged el Sayed with lying about his credentials, and a national furor erupted. HE LIED read a banner headline in Expressen, a Stockholm tabloid. Afraid that his new notoriety would hurt Fermenta, el Sayed agreed to give up day-to-day management of the company. But he is hardly ruined: his 43% share of Fermenta's stock is still worth nearly $350 million.