On October 1, Prime Minister Matti Vanhanen won a vote of confidence that was called by the opposition in response to campaign funding irregularities and improper conduct.

Campaign Financing -- Why the Commotion?

Donating and receiving campaign contributions from public, private or corporate sources is not illegal. It is the lack of transparency that has sparked intense debate over the past 18 months. For decades, Finnish politicians have not had to declare the sources of their campaign and party funding, which often mounts to tens of thousands of euros. Much of the current furore revolves around the fear that business interests have bought favours from elected officials. MPs have concealed the ultimate sources of campaign funding through the use of supporters' associations.

A Political Storm Erupts

In the spring of 2008, news reports emerged that Prime Minister Matti Vanhanen indirectly received election campaign funds from businessman Toivo Sukari, a financier of the proposed Vihti business park. Vanhanen had given his support to the controversial real estate project despite much opposition. News came to light that the premier had received campaign funds from an organisation known as the Association of Developing Finnish Provinces ( Kehittyvien Maakuntien Suomi) or KMS, which is backed by Sukari.

Following heat from the media, MPs and cabinet members disclosed additional details about their election campaign finances in the last Parliamentary elections. MPs had campaigned to the tune of eight million euros, with much of the funding coming from obscure sources. Measured in terms of campaign spending, the National Coalition is the priciest political grouping in Parliament, with its members having spent 2.5 million to get elected.

It's generally known that trade unions tend to donate to the Social Democrats, now the country's leading opposition party. Industrial and employers' organisations have generously backed the conservatives, and agricultural and forest interest groups have supported the centrists.

Controversy Traces Roots to Foundations, Interest Groups

Nova Group and KMS
Nova Group is a now-bankrupt real estate development company. KMS ( Kehittyvien Maakuntien Suomi or Association of Developing Finnish Provinces) is a campaign finance organisation bankrolled by wealthy businessmen.

The Scandal: The Centre and others received money from the KMS, which was a handful of business owners, at least one of whom had business ventures needing government approval. Nova is accused of channelling large sums of money to KMS despite its own shaky finances before declaring bankruptcy. KMS passed cash on to several parties, primarily the Centre and National Coalition. Total support by KMS to candidates topped 400,000 euros.

The Local Government Pensions Institution -- Keva
The Local Government Pensions Institution is responsible for providing and financing employment pensions for local government officeholders and employees. Keva was investigated by authorities and later cleared of any improper connection between a significant investment it made and generous campaign contributions to the Prime Minister's Centre Party.

The Scandal: In 2007, real estate group Nova made generous donations to the parliamentary election campaign coffers of the Centre party. Soon after, Keva invested millions in Nova Group's snowmobile factory development project in Rovaniemi. Keva’s CEO resigned in summer 2009 amid the controversy.

The Finnish Slot Machine Association -- RAY
The Finnish Slot Machine Association raises funds through gaming operations to support Finnish health and welfare organisations.

The Scandal: RAY funded the Youth Foundation, which in turn contributed money to election campaigns, including that of RAY Chairman and former Centre Party MP Jukka Vihriälä.

The Youth Foundation -- Nuorisosäätiö
The Youth Foundation is an association that builds and maintains apartment blocks for young people to rent. Between 1981 and 2003 Vanhanen was vice-chairman and subsequently chairman of the foundation.

The Scandal: The foundation has supported the election campaigns of its chairmen Matti Vanhanen and Antti Kaikkonen, including Vanhanen’s failed presidential bid. The foundation, which receives significant funds from RAY, channelled money into RAY chairman Jukka Vihriälä's campaign supporters’ association. In September 2009, Centre MP Antti Kaikkonen stepped down as chair of the Youth foundation. Meanwhile, a YLE current affairs programme in September alleged that Vanhanen had received building materials free of charge for personal use from a construction company that had built apartment buildings for the Youth Foundation. Vanhanen denies any wrongdoing.

The Sports Education Foundation -- Urheiluopistosäätiö
The foundation aims to support sports education and other exercise initiatives.

The Scandal: The charter of the Sports Education Foundation forbids it from financially backing political campaigns; however, it supported numerous SDP candidates, such as President Tarja Halonen. Former SDP premier Paavo Lipponen is a top official of the foundation.

What’s Next?

Finland’s political parties appear to be competing directly to see who can now propose the most stringent controls to the campaign funding system. A parliamentary election campaign funding committee headed by Lauri Tarasti is currently preparing amendments to new campaign funding legislation.

"Strict limits on campaign funding would be tantamount to transferring influence from political parties’ campaign machines to external forces," says Tarasti, adding that the drive to reform the system seems to be out of control.

The campaign funding debate has been fuelled by accusations of corruption, wrongdoing and ignorance, with many people in Finland believing the scandal has tarnished Finland’s reputation as one of the world’s least corrupt countries. Politicians meanwhile vehemently claim that they’ve done nothing illegal.

Observers say the government has been paralysed by the scandal but is unlikely to fall before 2011 elections, pointing to the breadth of the scandal and work on new party funding rules, as well as the time needed to organise elections.