Records of Nova Group bankruptcy estate show reckless spending

Company provided entertainment during Centre Party cruise in 2007

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Spending by managers of the real estate service company Nova Group has been found to have been reckless in the time leading up to the company’s bankruptcy.
      In addition to paying for expensive luxury cars and political contributions, money was spent on items ranging from a massage chair to a vintage fire engine.
      Nova Group was especially active during a cruise held in December 2007 for members of the Centre Party who were preparing for the municipal elections the following autumn.
      The new political connection came out on Wednesday with the publication of a report on the debts of the bankrupt estate of Nova Group.
     
On December 8th, 2007 representatives of Nova Group gave a lecture during the Centre Party cruise on “Nova Group’s financial models lighten investment financing of local authorities”.
      In the Parliamentary elections of 2007 Nova Group had generously contributed to parties, especially the Centre Party. Many of the Centre Party MPs who had received donations from Nova Group were at the cruise, preparing for the next autumn’s municipal elections.
      Before it went bankrupt, Nova Group had considerable business interests in municipal building projects.
     
A debtor report made public on Wednesday mentions a payment of EUR 7,000 to the Centre Party for the cruise held on December 8th and 9th.
      The Centre Party had not disclosed the donation before, even though Party Secretary Jarmo Korhonen held a press conference in mid-June in which he said that he would publish all outside donations over EUR 5,000 from 2006-2009.
      Jarmo Korhonen did not return any calls from Helsingin Sanomat on Wednesday.
     
The Centre Party’s communications planner Matti Mönttinen characterised the failure to mention Nova Group’s subsidy of EUR 7,000 as a case of “human error”.
      The money allowed Nova Group to rent a suite on the ship, as well as five luxury cabins and a seminar where it briefed the Centre Party figures on its real estate business.
      The contribution is already the second such external payment that Korhonen had forgotten to mention.
      In August it came out that in June there had been no mention of a donation of EUR 8,000 from the financial concern OP-Pohjola in 2007.
      That case was also written off as “human error”.
     
The examination of the bankrupt estate also shows that Nova group was in dire financial straits already in late 2006.
      Receiver Pekka Kokko said at Wednesday’s press conference that the Nova Group bankruptcy stemmed from unreasonable costs and the use of monetary assets on expenses that were unrelated to its business activities.
      The owners and operative management of Nova Group attribute the bankruptcy to the overall world economic situation.
     
I have never seen such reckless use of money as I have here”, Kokko said at the press conference held at the Bützow legal firm in Helsinki. Kokko has dealt with more than 100 bankrupt estates.
      He sees no good reason for the out-of-control spending.
      “[Nova Real Estate Development CEO] Arto Merisalo has said that this was a patriotic act. I have seen no reason for it”, said Kokko after examining the company’s bookkeeping.
     
The Nova Group estate has less than EUR 29,000 worth of assets and EUR 6.9 million in debt.
      The company has failed to pay mandatory taxes and pension contributions worth more than EUR 1.7 million.
      Journalists going through the list of Nova Group assets and liabilities were amused to see a 1977 Sisu fire engine among the company’s acquisitions.
      “The price was five thousand euros, but I would estimate that the correct market price would be about three thousand”, Kokko said.


Previously in HS International Edition:
  Nova Real Estate Development CEO Arto Merisalo remanded in custody (20.8.2009)
  BREAKING NEWS: Bankruptcy Ombudsman orders special audit of Nova Group (19.6.2009)
  Vanhanen expects detailed report from Centre Party secretary on 2007 election funding (15.6.2009)
  Prime Minister denies accusations of lying over campaign finance issue (17.6.2009)
  CEO of Nova Group claims Centre supports real estate company in zoning issue (30.5.2008)

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