Supervisory Board express confidence toward SITRA and its managers

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The Supervisory Board of the Finnish Innovation Fund (SITRA) gave its approval to recent decisions by the Board and administrators of the fund on Friday. The move came after the Supervisory Board, composed of Members of Parliament, were given an explanation on why some of the risk investments of the fund are being managed by companies owned by former SITRA administrators.
      The Supervisory Board spent about two hours discussing the matter on Friday.
      "The conclusion drawn at the discussions in the morning was that SITRA's administration and its managers enjoy the unanimous confidence of the Supervisory Board", said the body's chairman Seppo Kääriäinen (Centre).
      Kääriäinen added that no changes were in store on the basis of the discussions on Friday morning. He said that it was the board's impression that the activities are in line with clear rules, and are also very transparent.
     
SITRA has allowed its funds of risk capital to be administered by former managers without a bid for tenders on who would do the job at the lowest cost.
      The Supervisory Board has learned that between five and six former SITRA managers have been accepted as private managers SITRA funds. Kääriäinen says that he knew about the arrangements, but he could not speak on behalf of other members about their possible knowledge.
      Kääriäinen noted that it is quite common in the business world for employees to become private entrepreneurs.
      He would not say if the practice would be allowed to continue at SITRA. Most recently two of SITRA's former managers were given a health fund portfolio worth EUR two million to administer last year.
      "Building the SITRA environment fund will come before the Supervisory Board. We will take a stand on outsourcing when such a fund is set up", Kääriäinen said.
     
The Supervisory Board was told that the administrative companies run by former SITRA administrators were paid the same fees that are generally paid on te market - between 2 and 2.5 per cent of the capital in the fund.
      "In the most recent one, Korona Invest, the fee was slightly lower - 1.9 per cent", Kääriäinen said. He added that the issue is very complicated, but important.
      "As we are moving on the borderline between public and private financing, the ethical side is emphasised", Kääriäinen says.
      In addition to the fee, the companies who administer the funds get a share of the rise in value of the investments. This means that the company that administers the fund gets 20 per cent, and SITRA itself gets 80 per cent of profit exceeding an interest rate of 6-8 per cent.
     
SITRA President Esko Aho said at Friday's press conference that the ethical and legal questions of the privatisation of the administration of the various funds had been considered very thoroughly . In his view, it is not possible to "sensibly" put the administration of the funds up to competition.
      According to a calculation by Helsingin Sanomat, about EUR 50 million in public funds are either completely or partially being administered by companies partly or completely owned by former managers of SITRA.
      Aho says that the former administrators of SITRA have not been given control of the funds under terms that were any better than others.
      On the other hand, the former administrators have benefitted from SITRA's decision to invest in funds that they administered: in the establishment of an investment fund, getting the first big client is very important.
     
One apology was heard at the meeting of the SITRA Supervisory Board, when MP Liisa Jaakonsaari (SDP) took back what she had said about linkages of the private business of fund manager Kari Tolvanen and the business of SITRA.
      In a recent article in her blog, Jaakonsaari claimed that Tolvanen had "reportedly" promoted his own log house business during a recent SITRA visit to Russia, which Tolvanen immediately denied.
      Jaakonsaari apologised to Tolvanen. She also said that she had no evidence for what she had written.


Previously in HS International Edition:
  Finnish Innovation Fund (SITRA)

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