The myth of Finnish incorruptibility

By Anni Lassila
     
      An often-repeated quotation believed to date back to the 1970s, and attributed to Nokia director Harry Mildh, states that "there is no person so insignificant as to not be worth bribing."
      Nobody seems to remember exactly whether or not Mildh ever really said this, but in any case the quotation reflects the zeitgeist of the 1970s and 1980s, when bribery in all of its forms was commonplace.
      Construction companies and political parties struck deals on zoning decisions and political donations. Contracts linked with the Helsinki Metro project were lubricated with the help of opulent hospitality and German marks.
      The times were right for greased palms. Finland had risen from poverty to join the ranks of the developed countries, and there was much construction going on and many large public projects.
      Both civil servants - who were used to secure jobs with modest pay - and politicians were tempted to grab a share of the prosperity.
      One factor in the equation was that although bribery of a civil servant has been a crime since the 19th century, the official definition of a civil servant has been very narrow. The law did not apply to people working in a state office under an ordinary labour contract.
     
For years, Finland has been at the top of the list maintained by Transparency International of the world's least corrupt countries. So we are incorruptible.
      However, the problem with these comparisons is that corruption manifests itself in so many forms. The TI report mainly tells us that the Finnish civil service is no longer bribe-driven.
      The report does not reveal how Finnish companies operate abroad, or how much corruption takes place in Finland that is considered acceptable in the eyes of the law.
      "Structural corruption is a much greater problem than bribery. Especially municipal trustees often operate in a questionable manner and contrary to the common good on the basis of their personal contacts", says Pekka Viljanen, Professor of Criminal and Procedural Law at the University of Turku.
     
While it has long been illegal to bribe a municipal civil servant, election campaign donations are legal, and they do not even have to be disclosed if an individual donation is less than EUR 1,700.
      There are considerable economic interests involved in the use of land by local authorities. Whose land is to be zoned for a recreational area? Which retail chain is to be granted the right to build a hypermarket?
      It remains unclear what politicians can get in return for their decisions. The reward can be campaign fund money, a job, or a better social position.
      Old-boy networks that resemble corruption also flourish in a country where nearly everyone knows each other.
     
Finns would nevertheless like to believe the Transparency International report, and that Finnish companies follow all of the rules when they do business.
      The bribery scandal that emerged in Siemens not long ago was a rude awakening to many. Former and present employees of the prestigious German electronics manufacturer have spoken in police interrogations of systematic transfers of funds to bribe accounts - a practice that has continued for years. This was used to grease the palms of buyers of telecommunications networks - especially in developing countries.
      Examples can be found closer to home as well. In one case that was made public, Wärtsilä and Instrumentarium have at the very least turned a blind eye to obvious bribery in their foreign dealings.
      Wärtsilä gave a million-euro shipping line discount not to the shipping line in question, but rather into the private bank account of a company director.
      In the last decade, in the sale of hospital equipment to Costa Rica, Instrumentarium used an agent who spent nearly nine million US dollars in bribes to local officials and politicians.
     
Bribe money is typically circulated through various fees paid to intermediaries and consultants. Corruption consultant Leila Mustanoja, the vice chair of the Finnish section of Transparency International, feels that people can no longer plead ignorance, pay money to a consultant, and close their eyes.
      "Alarm bells should go off whenever a contract for the services of an agent or consultant, or for subcontracting gets drawn up. Bills must be documented in detail, and every item that is paid for must actually exist", Mustanoja says.
      In the case of Wärtsilä, charges were dropped in both the lower court and in the court of appeals. The investigation into the Instrumentarium case is still ongoing.
     
But is it possible to succeed in a developing country without resorting to bribery?
      Stockmann is often mentioned as an example of how the tough line works. Stockmann has expanded into Russia, and has systematically refused to pay bribes at all levels of the complicated bureaucracy there.
      The policy has worked so far. However, the week before last it emerged that the construction of the company's department store in St. Petersburg has unexpectedly been singled out for attention by officials there. It was not said if the problems were caused by the company's anti-bribery stance.
      Marko Taskila, who works as a consultant in India, and who has dealt with Finnish companies there as well, says that Nordic companies distinguish themselves in India by actually acting according to their anti-corruption declarations. He says that in India, paying bribes can make it easy to deal with many things, which would go slowly otherwise.
      "It is my experience that Finnish companies prefer to wait", Taskila says.
     
Large international companies take the corruption problem seriously. Ericsson and Nokia, who work in the same telecommunications networking field as Siemens, have unyielding rules.
      For instance, Ericsson uses the international Trace organisation to audit the bookkeeping of all of its agents. Trace is specialised in uncovering shady payments.
      However, in recent years the company's activities have come under scrutiny in Sweden, but all suspicions of bribery and tax evasion were overturned in court in early December.
      Nokia reports that it carefully scrutinises the invoicing of its agents, and that it uses go-betweens as little as possible. The company's financial administration is also completely global, which means that authorised individuals can check up on monetary transfers in any country from a desk in the the head offices in Espoo.
      Both companies also point out that especially in the field of mobile networks, customers today - even in developing countries - are almost always private companies, which do not tolerate bribing of their employees.
     
Distinguishing between the private and public sectors is important in the corruption debate. Civil servants use money that is common to everyone, which means that responsibility can more easily fall into a grey area. Private companies, on the other hand, are more vigilant, and make sure that acquisitions are made on the basis of business sense, and not to promote the personal interest of the individual responsible for buying.
      Bribing a civil servant is punishable in Finland regardless of whether or not the bribe is paid in a country where it is not criminalised. Bribery in business, on the other hand, is not punishable in Finland, if it is legal in the target country.
     
Helsingin Sanomat / First published in print 11.2.2007


Previously in HS International Edition:
  Finland is again one of world´s least corrupt nations (7.11.2006)
  Building officials in St. Petersburg accuse Stockmann of violations (2.2.2007)
  State Prosecutor says Finland has more corruption than people think (30.11.2006)
  Heroes to zeroes: Finland the eco-list darling joins the rank and vile (31.10.2006)
  Corruption low in Finland - rampant in many EU countries (21.10.2004)

Links:
  Transparency International website