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Economy Minister Rehn insists PM had no conflict of interest in mine deal

Outgoing Economic Affairs Minister Olli Rehn has come out in defence of Prime Minister Juha Sipilä following reports that an engineering company owned by the PM’s relatives won a lucrative contract from the taxpayer-funded Terrafame mine in eastern Finland. Rehn said he is "absolutely sure" that Sipilä had no knowledge that the company owned by his uncles and cousins had won a half-a-million-euro order from the former Talvivaara mine.

Outgoing Economic Affairs Minister Olli Rehn. Image: Yle

Speaking on Yle’s Ykkösaamu discussion programme Saturday morning, Economic Affairs Minister Olli Rehn said that Prime Minister Juha Sipilä had not been disqualified when government decided on providing some 100 million euros in additional financing for the struggling operation.

However he noted that at that time Sipilä had no advance knowledge that an engineering firm owned by his relatives was about to receive a plum contract to supply equipment to the mining operation.

Earlier this week Finnish media reported that an engineering firm owned by Sipilä’s uncles and cousins – Katera Steel – had received a half-a-million-euro order from the state-owned Terrafame mining company, formerly known as Talvivaara.

Rehn: Deal would have been struck anyway

Rehn told Yle that when the decision was made to stump up additional funds for the mine, Sipilä was not aware that Katera Steel was about to receive the order from Terrafame.

"My own understanding is that there has been no conflict of interest problem in this case. I’m absolutely sure that the Prime Minister had no knowledge or even an inkling about this project or deal," Rehn declared.

The minister said that he had checked the background of the deal with Terrafame once the reports came to light. He said that the mining company would have ordered ore conveyors from Katera even if government had decided to wind down the mine’s operations.

"Even in that case it would not have mattered because the mine would have ordered the ore conveyers in any case," Rehn noted, adding that it was not possible for the government to discuss the deal in advance, since it had no knowledge of it.

Rehn also defended the government’s decision to continue bankrolling the once-bankrupt mining operation, saying that the decision had been made on a sustainable basis.

Prime Minister Sipilä has since accused Yle of peddling insinuations for its reporting on the case.

Additional cuts if no economic growth

Earlier on Saturday Prime Minister Juha Sipilä had sought to calm fears about new austerity measures, following comments about more spending cuts by Finance Minister Petteri Orpo.

Orpo told the daily Helsingin Sanomat that government could roll out additional cuts of up to two billion euros next spring - if the economy does not respond to ongoing remedial measures.

Orpo said that one percent economic growth would not curb the rise in government debt by 2021. However Sipilä told news agency STT there is no reason to believe that efforts to right the economy won't bear fruit.

For his part, Rehn told Yle that he shared Orpo’s concerns about the country’s economic development.

He said that while the government hoped to avoid additional cuts, it should prepare for such an eventuality if there is no clear change in the direction of the economy.

"There is no automatic austerity machine that says we would be compelled to implement additional cuts next spring. It depends specifically on how much growth can be strengthened and how the economy develops over the next six months," he explained.

"However I share Orpo’s view that we should prepare for it if economic growth doesn’t pick up, then in that case we would be faced with having to make more cutbacks."

Like Orpo, Rehn said that the one-percent growth forecast for next year is not enough. He pointed out that Finland would need economic output of 1.5 – two percent for any significant improvement in the employment situation.

"Now is the time to focus on taking the kinds of actions to improve incentives in the labour market, in addition to the competitiveness deal. On top of that we should also promote more local collective bargaining agreements," the minister stressed.

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