Monday 06.07.2020

Trash-masks scandal: government agency knew it was contracting with troubled companies

The Finnish National Emergency Supply Agency knew of Onni Sarmaste's tax debts and also that Tiina Jylhä's company lacked a valid VAT identification number. Even so, they gave them € 10 million in exchange for the useless masks and respirators.

From left to right, Tiina Jylhä, Tomi Lounema, Onni Sarmaste and Minister of Employment Tuula Haatainen.
From left to right, Tiina Jylhä, Tomi Lounema, Onni Sarmaste and Minister of Employment Tuula Haatainen.

Finnish National Emergency Supply Agency (Nesa or Huoltovarmuuskekus, in Finnish), which became famous for the fiasco of the millions of defective masks and respirators purchased at the start of the pandemic, knew they were making contracts with troubled companies.

Even so, they went ahead with the contracts and ended up paying around 10 million euros for useless medical equipment.

The masks, which were in principle bought for use at Finnish hospitals, arrived from China by plane on 4-5 April but did not meet the quality requirements for hospital use.

The government initially tried to save face by saying the defective material could still be used for example in nursing homes. However, a subsequent assessment by the VTT Technical Research Center revealed that they were not even useful for that, due to their bad smell and because they caused allergic reactions.

Soon the Finnish media began to uncover irregularities surrounding the case: the material was purchased from Onni Sarmaste, an entrepreneur of dubious reputation for his criminal records and his debts with the Finnish Treasury, and contracts were made also with Tiina Jylhä, a former TV-reality star who today runs a plastic surgery clinic in Estonia.

Heads rolling

Heads began to roll in Helsinki. Nesa's CEO Tomi Lounema had to resign and two other members of the management team were removed from their posts. Criticism and calls for resignation were also directed against Minister of Employment Tuula Haatainen, under whose command the center operated. However, she endured criticism and retained her position.

Before resigning, Luonema admitted they had spent 10 million euros on protective equipment that was not up to the standards of hospital use. He also said that he did not verify the business history of Tiina Jylhä, and Onni Sarmaste before transferring to their accounts the 10 million euros of the Finnish taxpayers.

Sarmaste was arrested by the police 11 days later on suspicion of fraud, but he claimed that the government agency's officials knew very well what kind of materials they were purchasing.

Without VAT ID

The latest inquiries reveal that the Nesa managers perhaps knew more than they admitted about the controversial business profiles of the people with whom they made the contracts.

The newspaper Ilta Sanomat published Tuesday an article based on an internal report commissioned by Nesa, which included interviews with several staff members. Among other things, the report says Nesa knew about Sarmaste's tax debts when it paid his company 4.9 million euros. 

The report also says that Nesa employees knew Tiina Jylhä's company did not have a VAT identification number or a credit rating when it also received 5 million euros. Still, they went ahead with the contracts.

To further round the circle, the state broadcasting company (Yle) published in April that Nesa refused the help of the prestigious Finnish company Optinova to order the protective equipment needed to face the epidemic. Instead, they procured clearly lower quality material through Tiina Jylhä and Onni Sarmaste.

Trash-masks scandal: government agency knew it was contracting with troubled companies
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