On Friday Finland’s Parliamentary Audit Committee, a group charged with overseeing the management of government finances and budget compliance, released the finding of an investigation into the 2015 handling of an ill-fated derivates investment by state-owned airport operator Finavia. Chair Eero Heinäluoma said the Transport Ministry failed to act appropriately in its response to the incident.
“The Committee has determined that the Transport Ministry’s activities were not in line with standardised corporate governance practices. The issue is linked to a negotiation process that was started outside the [Finavia] board, without the board’s knowledge,” he said.
When asked about Transport Minister Anne Berner’s role in the 2015 events, Heinäluoma replied that ministers are responsible for corporate governance in all circumstances.
The Committee found that in early autumn 2015, the Transport Ministry supported bringing charges against the auditing company Deloitte and certain members of the Finavia senior management. But the Ministry soon changed its mind on the matter and began to contact the auditor directly on its own initiative.
In September 2016, Transport Minister Anne Berner denied that she pressured the Finavia board not to bring legal action against the former managers who had made the risky derivative investments. This was after the news agency STT published an email that indicated the opposite.
“Should have understood the risks”
The Committee was also of the opinion that the risks of investing in the derivatives should have been known. From 2009 to 2011, the management of airport operator Finavia invested in several high-risk derivatives that ended up making the company a loss of over 30 million euros. As a state-owned company, the taxpayers were the ones who ended up footing the bill.
Finland’s Transport and Communications Ministry is responsible for overseeing Finavia’s operations.
“Clear mistakes were made in the derivative deals, with risk-taking on a scale that doesn’t follow the principles of a state-owned enterprise. Someone should have realized already at this time that it wasn’t appropriate,” Heinäluoma said on Friday.
The Committee also stated that universal risk management guidelines should be drawn up for all state companies in future, to prevent mistakes like what transpired with Finavia. The Committee has been investigating the legality of Transport Minister Anne Berner and Finavia’s activities since autumn 2016.
The National Audit Office also investigated the Finavia derivatives case in September 2016. Their probe ruled that the former management had shown inconsistencies in both its decision-making and governance. The state auditors also ruled that the actions of the Ministry of Transport and Communications, led by Minister Anne Berner, did not fully comply with the principles of good governance.