Patria CEO resigns amid ongoing NBI probes into bribery allegations

The ongoing investigations into corruption allegations have led to the resignation of Jorma Wiitakorpi, the CEO of the Finnish state-controlled arms manufacturer Patria.
      The National Bureau of Investigation (NBI) has interviewed Wiitakorpi as a suspect and material witness over the artillery and vehicle deals made by two of Patria’s former subsidiaries, Patria Vammas Oy and Patria Vehicles Oy, in Egypt and Slovenia. However, he is no longer suspected of any illegal activities.
      Wiitakorpi will be replaced by Heikki Allonen, the former CEO of the Finnish consumer goods group Fiskars, and Wiitakorpi will continue as a senior adviser to Allonen until the spring of 2009. In addition, Patria will give him a severance settlement equivalent to one year’s salary.
      Allonen, 54, is also a member of the Patria Board.
     
”The ongoing criminal investigation of the activities of certain Patria subsidiaries has led to a situation which substantially reduces the outward credibility of Mr. Wiitakorpi and therefore his ability to act as the CEO”, said Patria in its statement on Monday.
      ”At the moment various Patria units are negotiating new, significant projects in many different countries. At the same time our competitors are taking advantage of the situation to arouse suspicions among our customers”, said Wiitakorpi in his own news release.
      Patria tried to dispel these suspicions by arranging a high profile press conference on Monday. As the state of Finland owns 73 per cent of the company, Minister of Housing Jan Vapaavuori (National Coalition Party), who is in charge of the company’s owner control, was also present at the event.
      In his speech Vapaavuori said that a bribery probe into a state-held company is an extremely serious and unfortunate matter.
     
The chairman of the Patria Board, Risto Virrankoski, reported on Monday that the process leading to the CEO’s resignation began about a month ago, and the eventual decision on the resignation was made jointly by Wiitakorpi and the Board.
      ”Wiitakorpi was the first to take up the matter, saying that if the situation gets awkward, he is ready to resign. After assessing the situation, the Board agreed that under the circumstances, it is better to take care of the matter”, said Virrankoski.
      ”However, as far as we know, there is no evidence that would connect Wiitakorpi to the suspected criminal activities”, he added.
     
Wiitakorpi reported on his departure to Helsingin Sanomat over the phone briefly. He said that the CEO is like the company’s face. If the face gets dirty, it must be replaced.
     
Chairman Virrankoski stressed that it is up to the new CEO to make decisions on whether or not the other Patria executives will be able to continue in their present posts. However, he said that he does not regard it as possible that those employees who have been under suspicion and in detention could continue in their previous posts at Patria.
      ”In order to do this business worldwide, one requires clean papers”, Virrankoski noted.
      A total of 15 Patria employees have been interviewed relating to the suspected bribery. Reportedly none of these employees belong to the highest management of the Patria Group.
      At the same time, Virrankoski does not believe that the company would need any new procedures in order to prevent bribery. In his view, Patria’s systems are in good shape already at present.
     
The NBI is pursuing two different branches of investigation. In connection with their investigations into the Slovenian branch, the NBI has detained two Patria employees, of whom one is still in custody. Associated with the Egyptian branch of investigations, a 47-year-old Egyptian woman, who was employed by a local agent used by Patria, was remanded in custody in July.
      Formal charges against the accused will have to be filed by November 27th, which means that the main hearing will take place no sooner than next year.
      The investigations continue in Finland, Slovenia and Austria, and the NBI will publish information regarding the investigations at their discretion.


Previously in HS International Edition:
  Adviser accuses Patria of questionable selling tactics (1.3.2007)
  Central Criminal Police arrest four Patria employees suspected of bribery (4.6.2008)
  Finland´s central criminal police to investigate Patria deals in Slovenia and Egypt (15.5.2008)

Links:
  Patria press release (18.8.2008): Why is Patria appointing a new CEO?
  National Bureau of Investigation press release (10.7.2008): Pre-trial investigation of the armoured vehicle deal between Patria Vehicles Oy and Slovenia
  Patria press release (18.8.2008): Jorma Wiitakorpi steps down from his position as Patria President and CEO