Recession brings more economic crime to Helsinki

Construction and catering worst hit

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The economic downturn has led to a surge in reports of economic crime in the Helsinki region. Police have been told of irregularities concerning bankruptcies have experienced a sudden surge.
      Ilkka Koskimäki, inspector at the economic and property crime unit of the Helsinki police, says that reports began to increase already in the autumn.
      “The recession can be clearly seen with us as well. The first spike was in September-October. Then the situation calmed down, but in January-February came a new spike linked with bankruptcies”, he says.
      The unit received 35 reports of suspected crimes in February, compared 20 in the same period last year.
      According to Koskimäki, a surge in bankruptcies inevitably brings to light more wrongdoing.
      “It is interesting to see what will happen in March, April, and May.”
      Kari Lintilä of the unit for the preliminary investigation of economic crimes, sees the same signs in the air that existed during the recession of the 1990s.
      “Loose money was pushed on people. At that time, it was possible to get more than you asked for. The same greed could be seen this time as well.”
     
Most of the recession-driven crimes focus on the construction industry in Helsinki. Coming in a close second is the cyclically-sensitive restaurant business.
      However, nine out of ten requests for an investigation involve Helsinki businesses in the construction business.
      “The companies that have gone under now are nearly all small shops, whose problems have come out as the economy has receded”, Koskimäki says.
      Many of the companies have been in trouble for some time.
      He says that the liquidation of assets may have begun in good time, when it was noticed that the company was in trouble. “Monetary assets are emptied, and the company’s machinery is sold”, Koskimäki explains.
      He mentions one case in which a bank account with EUR 100,000 is emptied in a month and a half, using a debit card. The bank records showed withdrawals of the daily maximum of EUR 2,000.
      Many companies in the business also operate as covers for criminal activities. Koskimäki estimates that there may be hundreds of companies in the construction business in Helsinki, whose boards include drug traffickers and users.
     
The companies themselves can operate quite legitimately in the construction business, but their books and bank accounts can be used to store proceeds of drug crimes.
      “It is money laundering”, Koskimäki says.
      A new phenomenon is for more foreign members to be named to the boards of the companies.
      “What is unusual about this is that the foreigners themselves are completely ignorant of this. The actual players are Finns.”
     
A long-standing problem are construction companies that avoid paying taxes. They do legal subcontracting for large companies, do legal invoicing, and keep their books in order.
      They slip into the grey zone when the companies “buy” subcontracting work from companies that only exist on paper, whose only purpose is to generate a credible set of expenses, whose payments are dealt with through forged receipts.
      The money that is is left is hidden from the tax authorities, and sometimes the companies as for refunds of the VAT mentioned on the receipts.


Previously in HS International Edition:
  One in four construction workers facing unemployment (9.3.2009)
  Finnish Bar Association cautions its members for billing practices in connection with economic crime cases (8.4.2008)
  Government to decide on support for flagging construction sector (18.11.2008)

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