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Minister hauls in Veikkaus bosses, demands probe into multi-million euro sweetheart deal

The state ownership minister described her discussion with Veikkaus management as "serious but open and constructive".

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Image: Ville Välimäki / Yle
Yle News

Government’s state ownership steering minister Tytti Tuppurainen has called for an independent external investigation into the way state gambling firm Veikkaus hands out contracts.

The move follows a report by Yle’s investigative journalism programme MOT in late January, which claimed that the gambling firm had signed a multi-million-euro deal without a competitive bidding process.

MOT’s investigations revealed that Veikkaus agreed the deal to provide its core gambling system with gambling technology provider IGT in autumn 2018. The core gambling system operates Veikkaus’ sports and lottery games such as the weekly Lotto.

The minister said in a statement that she requested a meeting last Wednesday with Veikkaus chair and former Nokia chair, CEO and President Olli-Pekka Kallasvuo as well as current Veikkaus CEO Olli Sarekoski.

"The meeting was serious, but open and constructive," Tuppurainen said in the statement.

Tuppurainen added that the meeting focused on the claims presented in Yle’s MOT programme about the firm’s procurement decision and corporate culture. The minister said that Veikkaus had provided its own report on the matter.

Firm claims actions lawful

Veikkaus has claimed that it acted lawfully and that it carries its responsibility for preventing problem gambling. However MOT’s reporting has revealed new examples of growing contradictions between the firm’s speech and its actions. According to Veikkaus, the decision to sign the deal was made "to safeguard the continuity of the firm’s operations".

Veikkaus director of legal affairs and corporate social responsibility Pekka Ilmivalta has confirmed that there was no open tender for the deal. He said that it was not necessary, because it did not involve any material changes to an existing agreement with the provider, but required the extension of the old contract.

However according to MOT, an external law firm had told Veikkaus that changes to the existing agreement would likely be unlawful.

Ilmivalta said that company decision makers were aware of the risks associated with not launching a competitive bid, but noted that the decision was made ”to safeguard the continuity of the firm’s operations.”

"This was done in a situation in which the Slot Machine Association (RAY), the horserace betting firm Fintoto and Veikkaus’ old operations had merged around one year earlier. We had to safeguard the continuity of operations and many systems needed to be integrated," Ilmivalta explained.

The Veikkaus legal director had previously said that the agreement that Yle reported on was based on a broader contractual agreement inked in 2004.

"This was for the old Veikkaus gambling system that has undergone various changes through the years. Our overall estimation was that there had been no changes to the core of the gambling system. Various parts of the system had been partitioned out and competitive bidding had been conducted for them as it should have been," he added.

Veikkaus wanted to keep contract quiet

Multinational gambling tech firm IGT is Veikkaus’ long-term partner, with both companies having collaborated for several decades.

Ilmivalta had confirmed Yle’s reporting that Veikkaus wanted to maintain a low profile with respect to the deal with IGT and had therefore not gone public with it.

"We provided extensive information about this internally. We have not actively sought to conceal it," Ilmivalta declared.

He said he believes that information about the agreement may have reach possible competitors through IGT, because its stock exchange reporting obligations required disclosure to investors.

The deal signed in autumn 2018 is an eight-year agreement with an option to continue the arrangement for an additional four years. It was adopted last spring. According to Yle the intention was to implement the amendments to the contract after a six-.month appeal period to ensure that the case would not be referred to Finland’s Market Court.

"It’s a perfectly normal procurement risk assessment," Ilmivalta said.

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