Major political row brewing over ownership of state-owned companies

Government wants permission from Parliament to divest from three companies

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The fully state-owned road construction company Destia got Hannu Leinonen as its new CEO on Wednesday.
      Destia and two other state-owned companies, Raskone and Labtium, are hot topics of conversation in Parliament, which will receive a request from the government on Friday for authorisation to give up the exclusive or majority state holdings in these companies, if necessary.
     
A political row is brewing, with the opposition Social Democratic and Left Alliance parties expected to put up some resistance to granting such authorisation.
      On the government side, Centre Party Deputy Chairman Antti Rantakangas has come out sharply against the possible sale of Destia.
      The Trade Union for the Public and Welfare Sectors (JHL) is set to hold an extensive work stoppage on Friday to protest government policy on state ownership. The protest will affect the three companies in question, as well as the aviation authority Finavia.
      JHL has warned that selling off the companies could lead to substantial harm.
      So why are there calls now to change the ownership arrangements of these three companies?
      “Once or twice in a government term, assessments are made on whether or not the state continues to have a strategic interest in the various companies. If there is no such interest, then jurisdiction should move to the country’s government. The situation has changed in those three companies”, explains Pekka Timonen, head of the Ownership Steering Department of the Prime Minister’s Office.
     
The companies involved are very different. The largest is Destia, which has received negative publicity over suspicions of criminal wrongdoing by former CEO Jukka Laaksovirta.
      Competitors have been on the attack, spreading claims that Destia would have been at an advantage in competing for state projects.
      Both Destia’s management and the Ownership Steering Department have denied the charges.
     
Raskone and Labtium have been overshadowed by the Destia controversy.
      Raskone, which concentrates on vehicle maintenance and repairs, is 85 per cent owned by the state. The state can reduce its ownership to 50.1 per cent, but Parliamentary authorisation is needed to divest completely.
      So doesn’t the state have an interest in maintaining a majority holding in “companies linked with national security”, as JHL says?
      “There are no interests”, Timonen answers. The aim is to put Raskone into a group in which the state, as an owner has no more than a strong interest as an investor - or almost no more.
      Timonen says that the situation at Raskone changed significantly when maintenance work for the Finnish Army was concentrated on the Millog company, half of whose shares are held by the state-owned defence and aviation manufacturer Patria.
      Raskone CEO Jyrki Kaskinen notes that the Defence Forces are still an important customer for Raskone, but it is a small proportion of its entire activities. He feels that the role of the Defence Forces has been given “fairly large dimensions” in the debate.
      Kaskinen himself has a 12 per cent holding in Raskone.
     
The smallest of the companies in question, Labtium. The laboratory services company was detached from the Geological Research Centre in 2007. It provides services for geological research, search for raw materials, and monitoring the state of the environment.
      JHL has emphasised that what is at stake in Labtium is the securing of high-level know-how in mining, and in the securing of research and analysis services. Sandström notes that Labtium no longer merely serves mining activities.
      “The share of research activities for other parts of industry and business is more than 40 per cent with us.”
     
Sandström says that it is deceptive to talk about “selling” Labtium.
      “The aim is primarily to organise ownership so that Labtium could get more capital and opportunities to expand. Labtium needs to grow, and it cannot do so exclusively through financing from income. The company needs more capital, which might be difficult to get from a state-owner alone.
      Sundström does not see the notion that Labtium would be “thoughtlessly sold off” as a real danger.


Previously in HS International Edition:
  State-owned companies embroiled in multiple controversies (17.8.2009)
  Häkämies wants to "restore discipline" to state-owned companies (1.6.2009)

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