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Ombudsman rules in PM's favour in Terrafame row

The Parliamentary Ombudsman has ruled in favour of Prime Minister Juha Sipilä over complaints the PM should have recused himself from decisions on funding for state-owned mining firm Terrafame. Sipilä's relatives own a company that received significant orders from Terrafame.

Juha Sipilä Image: Vesa Moilanen / Lehtikuva

Prime Minister Juha Sipilä has been exonerated of charges that he should not have participated in funding decisions for a state-owned firm that went on to order 500,000 euros worth of mining equipment from a company owned by his relatives.

The Parliamentary Ombudsman launched an investigation after complaints from members of the public. Sipilä himself had asked the Chancellor of Justice to look into the case, but the first reports came to the Parliamentary Ombudsman he took on the case.

The row started in November when Sipilä's government approved 100 million euros in additional funding for the mine, which lost 134 million euros last year. It has suffered a series of environmental problems that resulted in the bankruptcy of its previous owner, Talvivaara, hundreds of millions of euros in costs to the state, and criminal convictions for senior managers.

'Miracle' in Sotkamo

Soon afterwards Sipilä travelled to the mine and declared there had been a 'miracle' in the mine's production process, and in the final quarter Terrafame did manage to turn a profit.

Then it emerged that Katera Steel, a Kainuu firm owned by Sipilä's uncles and cousins, received an order worth 500,000 euros after the government funding was announced. Sipilä's children owned five percent of Katera Steel's stock before divesting the shares in January.

After Yle reported those links, Sipilä bombarded Yle journalists with emails criticising the story, and sparked a wider scandal over how Yle reacted to the political pressure.

No conflict of interest

The ombudsman's report states that the PM's children did not get any special benefit from the decision to grant Terrafame government funds, and that Katera would have been awarded the contract even if the mine had shut down—and the state would have paid that bill too.

The ombudsman also found that although the company is classified as close to Sipilä based on its background, ownership and governance, but that in any case there was no conflict of interest, partly because Katera's success or otherwise was not dependent on the contract from Terrafame.

The ombudsman said he had turned up no evidence of any suspicions that Sipilä may have worked to benefit Katera at any stage in the Terrafame funding process.

The Chancellor of Justice is currently conducting a separate investigation into Sipilä's links with Chempolis, an Oulu firm that signed a huge deal in India during a trade visit with Sipilä.

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