Mikael Walther urged investors to vote against the board’s decision to remove him at an upcoming meeting on Oct. 24, according to a letter to shareholders seen by Bloomberg. 

Walther’s request came as Klarna Chairman Mike Moritz penned a separate letter to investors explaining that the recent vote followed an investigation into Walther’s alleged conduct by the law firm Freshfields Bruckhaus Deringer US LLP, according to people who had seen the letter.

The dueling missives are the latest sign that tension is simmering on Klarna’s board ahead of its potential initial public offering that’s expected to take place next year. The vote to oust Walther comes after the company rejiggered its board earlier this year, replacing Sequoia Capital’s Matthew Miller after he unsuccessfully called for the removal of Moritz, who previously led the storied venture capital firm.

Behind the scenes of that public flip-flop were Siemiatkowski and Victor Jacobsson, two estranged co-founders that continue to clash on key governance decisions. The two have fought over how the company will go public and how much control its CEO will ultimately have in that entity.

Klarna’s valuation plummeted to $6.7 billion from $45.6 billion in a 2022 funding round. The company had more recently considered an initial public offering at a $20 billion valuation, Bloomberg reported earlier this year. 

Walther has long represented the interests of Jacobsson on the board. In his latest letter, he said the Freshfields probe came after he and Jacobsson challenged the board’s plans to award Siemiatkowski a bonus that he claimed would cause Klarna to incur a direct cost of $2 billion.

That bonus, Walther said in the letter, could be worth as much as $35 billion in the long term. Companies can structure incentive payments in a variety of ways but they often pay out more if certain targets for profitability or share price appreciation are met.

At the time, Walther was also opposed to Klarna giving Siemiatkowski so-called super-voting shares, which typically hand founders and other early investors more power over their businesses even if they only hold a small slice of the stock. 

“This investigation is being used as a tactic in an ongoing disagreement over the right long-term governance structure for Klarna,” Walther said in a statement to Bloomberg. “I categorically reject its unsubstantiated accusations. I have always acted in the best interests of the company and its shareholders in my role as a Klarna board director.”

The board, for its part, lost confidence in Walther after he threatened to veto certain items or stall important decisions, including one to set up a new UK-based holding company, Moritz said in his letter, which was first reported by the Swedish news outlet Breakit. The formation of that holding company, which Klarna said it completed in May, was a key milestone that gives the firm flexibility on where it will list.

Representatives for Klarna, Freshfields and Sequoia declined to comment. Moritz did not respond to a request for comment.

In his letter to investors, Walther said Freshfields alleged he was potentially in breach of his duty of loyalty to the company during a 2022 fundraising round that saw Klarna’s valuation plummet. He argued, though, that work by him and Jacobsson — who together own about 9% of the company, according to Walther — helped the company raise $500 million during that round. 

“Our actions during the fundraising process benefited Klarna and certainly do not constitute a breach of any laws or regulations,” Walther said in his letter. 

Despite the turbulence in its board room, Klarna has been steadily making preparations for its planned public debut. It’s close to picking the banks that will help the company with that offering and it’s been refocusing its business on core operations. In June, for instance, Klarna agreed to divest its Checkout payments business for about $520 million.

Founded in 2005, Klarna offers payment options to more than 150 million active customers making around 2 million transactions per day, its website shows. It has said it has nearly 40 million customers in the US.