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Gov't to audit Business Finland's 100k coronavirus grants

Lobbyists, IT companies, a social media firm, reality TV stars and retailers have all received 100,000-euro grants.

Critics of the funding programme have said that firms in dire need have not been able to get financing. Image: Henrietta Hassinen / Yle

Finland is to investigate a 200 million euro programme that has granted funding to software firms, consultancies, television production companies and others as part of emergency funding linked to the coronavirus crisis.

Economic Affairs Minister Mika Lintilä took to Twitter on Tuesday to make the announcement, following controversy over some of the largest grants.

"The Ministry of Employment and the Economy's internal audit [team] will launch an audit of the corporate financing granted by Business Finland -- for the benefit of all parties. In addition I discussed [this] with the director general of the National Audit Office of Finland and it is clear that the NAOF will also look into this in its entirety," Lintilä tweeted on Tuesday afternoon.

Last weekend, weekly Suomen Kuvalehti reported that government funding agency Business Finland had doled out the largest 100,000-euro grants to recipients such as the couple behind the Finnish reality TV auction show Suomen Huutokauppakeisari.

Jounin Kauppa in Ylläs northern Finland, a family general merchandise business that is home to the largest K-supermarket store in the Kesko retail network, also received the maximum sum.

Textile firm Finlayson received 100,000 euros, as did media production company Yellow Film & TV. Meanwhile according to SK, lobbying firm Miltton Group and blog-turned-social media community Huono Äiti also qualified for the maximum grant.

Story continues after photo

Economic Affairs Minister Mika Lintilä. Image: Heikki Saukkomaa / Lehtikuva

The grants were presented as development aid as part of a new programme providing "funding for business development in disruptive circumstances", according to the Business Finland website (siirryt toiseen palveluun).

Applicants needed to present a development plan and also needed to stump up some financing of their own. The funding was therefore not designed to cover debts or expenses incurred as a result of emergency measures adopted to limit the spread of novel coronavirus.

"The criteria have been harmonised since the early days and that has also shown in the growth in the percentage of rejections to around 20 percent, " said ministry permanent secretary Petri Peltonen, suggesting that it was easier to qualify for the grant in the early days of the programme.

"I would say that of 8,000 funding decisions there is one percent -- 80 firms - that may have had somewhat unusual or [what the media might see as] eye-catching decisions," he added.

Receipts and purchases to be checked

The ministry has however taken note of some of the funding decisions.

"I have seem some of these cases [mentioned] in public. It is impossible for me to say whether or not there has been any wrongdoing but if there has been, then Business Finland and Ely-centres [local economic development centres] will conduct retroactive audits," minister Lintilä declared.

In addition to the funding agencies, audits will also be conducted by the Ministry for Employment and the Economy as well as the National Audit Office of Finland (NAOF).

"They will need to have proof of expenses and of use of external services and if they don't add up to the amount of support [granted] we will reclaim the balance. You don't make a profit with it. In addition the percentage of rejections has increased quite a lot. This suggests that we are now reviewing the criteria," Lintilä commented.

However Lintilä called on officials to exercise a broad interpretation of the criteria to save as many viable businesses and jobs as possible. He added that it would be problematic to change the criteria mid-programme.

"If we make many changes to the criteria then we will soon face another round of applications. The firms that feel they have received too little or who haven't received anything at all will then re-apply," he pointed out.

Parliamentary question over funding

Social Democratic Party MPs Tarja Filatov and Ilmari Nurminen have filed a parliamentary question asking for the progamme's terms to be modified so that firms in crisis because of the pandemic can get funding to cover their fixed costs.

"Preserving jobs is a central issue in handling the economic crisis caused by coronavirus," Filatov and Nurminen stressed.

Filatov added that Business Finland's funding policy seemed to focus on firms that were not in dire need. She said that at the same time many companies in trouble have no means of support, especially with respect to paying rents.

Minister: Recipients "have experience" applying

Lintilä previously told Yle that the fact that consulting and software firms were able to qualify for the financing didn't come as a surprise.

"It says that they have experience applying, in other words they have applied for funding before. It also shows that some industries have active background organisations," Lintilä added.

Data released by the Ministry for Employment and the Economy, showed that consultancy firms employing between six and 250 people in particular accounted for a significant proportion of the money dished out by Business Finland.

According to the ministry's data, Business Finland has so far received roughly 20,000 applications and issued decisions to about 5,000 firms.

Large restaurants, bars still awaiting support package

Meanwhile, local economic development centres or Ely-centres have largely been supporting micro enterprises employing up to five people during the crisis and have mainly issued grants to restaurants, bars and coffee shops.

So far such centres have received more than 15,000 applications and handed down about 3,500 decisions.

Meanwhile the ministry is still working on a separate support package to compensate hospitality industry businesses suffering from government's decision at the end of March to close restaurants, coffee shops and bars.

The Finnish Hospitality Association MaRa, has asked for 300 to 400 million euros to help shore up businesses that have had to close their doors, while the Federation of Finnish Enterprises is calling for even more government support.