Intensive inspections reveal widespread fraud in Finnish restaurants

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Intensive inspections implemented at Finnish restaurants over the past three years as part of a project on developing cooperation among authorities have revealed a wide spectrum of frauds.
      In the Greater Helsinki area, it appears to be fairly usual to sell food and drinks under the counter, to generate false receipts, and to use illegal labour, among other forms of deception. The majority of these frauds were committed by ethnic restaurants.
      In the course of the inspection operation carried out through cooperation among various authorities between 2002 and 2005, a total of about 900 tax inspections took place, followed by over 70 preliminary criminal investigations. Several inspections and criminal investigations are still under way.
      According to the tax authorities' estimates, the inspections have brought to light over EUR 16 million in hidden dividend payouts and around EUR 11 million in wages that have not been reported to the tax authorities.
     
The intensive inspections followed a 2002 report indicating that the volume of the grey economy was some six to eight percent of the total revenue of Finnish restaurant businesses. In terms of money, this amounts to an annual sum of EUR 300 to 400 million.
      "The organisations of Finnish employers and Finnish trade unions all supported the idea of conducting intensive inspections in the restaurant branch", says head of the project Janne Marttinen.
     
Marttinen was in charge of organising the cooperation among authorities. Other parties involved in the operation included the Finnish Tax Administration, the Finnish Police, the National Product Control Agency (STTV), and the occupational health authorities.
      "Four out of five inspections led to some consequences", reports Marttinen.
      Three restaurant chains in the Greater Helsinki area were named as pilot targets. One was located in Espoo, another in Northern Uusimaa, while the third had restaurants both in Helsinki and Vantaa. All owners or restaurateurs were of foreign origin.
      Causes for additional taxation and criminal investigations were found at all inspected restaurants.
     
The ethnic issue was encountered even later on. Over 70 percent of all requests for inquiry during the operation were focused on foreigners or Finnish citizens with a foreign background.
      However, the findings of the inspections were acieved as a result of targeting based on background reports. "After all, even Finns know the same tricks", says Hannu Kuortti of the Finnish Tax Administration.
     
The authorities met with a wide palette of tricks related to the grey economy. Apart from sales under the counter, illegal labour, false receipts, and tax evasion, among other forms of deception, even suspicions over money laundering were raised.
     
It was easy to discover the sales of alcohol under the counter, just by comparing the information of the purchased alcohol beverages with the reported sales. In all cases, the methods of deception have been fairly simple, leading to effortless detection.
      "In many cases, the frauds have been based on the belief that the information will never be checked", Kuortti concludes.
      An article about two Turkish cooks who sued their employer - a Turkish restaurant in Helsinki - for unpaid salaries, was published in Helsingin Sanomat on Sunday. The cooks won the case in the district court.
A more extensive piece on the case of the Turkish cooks will appear among our weekly articles on Tuesday.


Previously in HS International Edition:
  Inspections reveal extensive tax evasion in restaurant business (6.9.2004)

Links:
  The National Product Control Agency (STTV)
  Ministry of Social Affairs and Health: Occupational Health Care

Helsingin Sanomat