Friday 12/4/20

Audit says some Business Finland aid recipients did not meet criteria

The audit found "isolated cases" in which funding was granted to non-eligible companies. "Considering the number of support decisions made and the value of financing provided, the non-compliance observed was not significant," the audit report says.
The building that houses the headquarters of Business Finland. Image: Google Maps.
The building that houses the headquarters of Business Finland. Image: Google Maps.

Some of the companies that got funds from Business Finland in the frame of the special coronavirus aid programme did not meet the criteria to receive the support. This is one of the conclusions of the inspection report submitted to the Ministry of Economic Affairs and Employment by the firm BDO Auditator Oy.

The scandal around Business Finland grants arouse in April. The money -800 million euros in non-reimbursable direct aid- was announced in March by the Government as a support for companies in trouble due to the coronavirus.

But one month later the Finnish press revealed how a huge amount of the funds ended up in the accounts of large consulting firms or celebrity-owned businesses or people with ties to politics, while regular entrepreneurs have seen their applications rejected. Even Prime Minister Sanna Marin made headlines when it was revealed that her husband's company also benefited from the program.

The case caused such anger among small business owners and many citizens that the Ministry of Economic Affairs and Employment ordered an audit, the results of which have been released.

"The key finding of the inspection was that Business Finland has granted support in accordance with the relevant regulations. The inspection did reveal some individual cases in which the criteria for granting support were not met. Naturally we will address these issues. However, on the whole it appears that support has been granted to applicants in compliance with the specified criteria and legislation,” concludes Director Antti Joensuu from the Ministry of Economic Affairs and Employment.

According to the Government, the inspection sought to establish whether the processing of applications was appropriately conducted, and assessed the legal compliance of decisions, the grounds for awarding or refusing funding, the number of applications and processing times, and the compliance of the intended use of funding. The purpose of the inspection was also to determine whether the funding criteria were clear and well communicated.

"Isolated cases"

The review commissioned by the Finnish Government says most of the funds were distributed according to the criteria stated by national legislation, EU state aid rules and the financing practices of Business Finland. 

The audit report also noted that compliance with the rules has been verified in most of the cases. However, "the audit found isolated cases in which funding was granted to non-eligible companies. However the shortcomings identified are not significant, given the number of grants and the amount of money (granted)," the report says.

Based on the inspection, Business Finland did not provide financing to any companies that, at the time the financing decision was made, were declared bankrupt or were undergoing restructuring procedures due to insolvency, or had tax debt in collection by enforcement, or had lost more than half of their subscribed share capital due to accumulated losses and were unable to attract further investments.

"Considering the number of support decisions made and the value of financing provided, the non-compliance observed was not significant," the report says.

The report also concluded that as a rule, the decisions to grant or refuse financing were based on the guidelines and criteria provided.

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