Finnish Party Funding Caught in the Act
A blurt from a seasoned MP plunged Finland into political turmoil. Party funding proved out to be filled with loopholes, enabling politicians to keep their campaign financing out of public eye.
After the furor, those happy days are over, writes Kyösti Karvonen, Managing Editor of Kaleva.
Without a careless slip of tongue, or without a spout of honesty, the dice would not probably have started to roll at all. However, either or happened and hell suddenly broke out in Finnish politics in the early days of May.
The decisive words were uttered by MP Timo Kalli, Chairman of the Centre Party parliamentary group, the biggest in the 200-member Parliament. In a YLE Public Broadcasting Company talk show, Kalli said he wittingly broke the law by not mentioning the names of the biggest donors in his last year's election campaign financial report. Kalli even divulged he checked in advance that the omission would go unpunished.
In short, the rest is history. Kalli's mind-blowing revelation opened the Pandora's Box of Finnish party funding, filled with a tailor-made lax law and lax enforcement and even laxer politicians, many of them apparently shy to disclose their campaign financiers to public scrutiny.
Traditionally, Finland is known, and also measured from survey to survey, as one of the most irreproachable nations in the world, with a well-functioning and all but incorruptible civic society. Having said that, it has become obvious the same does not exactly apply to party funding.
At its height, the controversy escalated even to a point where Prime Minister Matti Vanhanen, also personally in the thick of it due to his own campaign finances, wondered aloud whether the legitimacy of the whole political system was in jeopardy. In turn, that even fueled wild speculations his centre-right coalition government might have to step down, with early elections, not seen in Finland for decades.
Damning report
The history of Finnish party funding is from the same vintage. After the WW2, during the Cold War years, several Finnish political parties and trade unions were financed in plenty from abroad, from east and west alike. The hush-hush mentality broken only now can be traced back to those years.
The political turmoil could have risen earlier. Last December, the Group of States against corruption, known by the French acronym GRECO, functioning under the auspices of the Council of Europe, published a damning report on Finland's party funding transparency. However, politicians and media alike paid relatively little attention to it. The GRECO Evaluation Team paid a three-day visit to Finland last June. You can find the 20-page report in www.coe.int/greco
For many a Finn, it must be blushing to read GRECO's carefully formulated but merciless conclusions. "The issue of political financing is sparsely regulated, as opposed to other areas of public administration", the sermon starts. And then: loopholes, not independent monitoring mechanism, "purely formalistic supervision of the accounts of political parties/candidates", low level of reporting requirements and inadequate sanctions for breaches "may open up possibilities for abuse". Yes, we are talking about Finland and not some phony dictatorship.
GRECO drew up a list of ten recommendations. If put into practice, they would turn the present rules upside down. In addition to GRECO, Transparency International has even earlier and frequently warned that, despite a strong record in matters of openness and public access to information, "a certain obscurity persists in political financing".
Despite these incriminating words, there is scant evidence that Finnish politicians would be corrupt and would tune their opinions to please their donors. About 70-80 per cent of party revenue comes from public funding. As party membership fees have fallen, dependence on private funding has risen. And because votes are cast to individual candidates and not to a party ticket, the campaign costs are higher than e.g. in Sweden where the parties decide the order of their candidates, with the seats won going to the party favourites on the top of the ticket.
Revelations, revelations
The scandal unravelled quickly after Kalli's blurt. It appeared that even many government ministers, including Minister for Finance and Deputy Prime Minister Jyrki Katainen, Minister for Defence Jyri Häkämies, Minister for Housing Jan Vapaavuori (all from the conservative Coalition Party) and Prime Minister Vanhanen, Vice Speaker of Parliament Seppo Kääriäinen, Minister for Environment Paula Lehtomäki and Minister for Agriculture Sirkka-Liisa Anttila had filed deficient reports on their campaign finances after last year's parliamentary elections.
Prime Minister Vanhanen admonished on several occasions MP's to complete insufficient reports, all but to deaf ears. All in all only less than 30 of them complied by the deadline given by Vanhanen. Reasons for non-compliance can only be speculated upon. Helsingin Sanomat, the leading daily, reported that towards the end of May there were still irregularities in over 40 and even over 70 MP's (there are 200 of them) campaign financial reports.
Many of those caught red-handed were, quite understandably, not that eager to explain publicly why they had not reported on their campaign finances properly right away. Most of the additions trickled from the Conservative and the Centre Party ranks in which the biggest election budgets are traditionally found. There were a couple of left-wing latecomers, too.
Prime Minister's ordeal
Prime Minister Vanhanen, with an already tarnished image from recent private scandals, found himself in a new one. During a visit to South America, amidst the worst funding furor, Vanhanen wrote in his blog a few good words about a shopping mall, called Ideapark, maybe to be built not far from Helsinki, the capital.
In the meantime it became clear Vanhanen's campaign coffers had received a nice donation from a previously unknown association called Finland of Evolving Regions, the Finnish acronym being KMS. One of the KMS's financiers is Mr. Toivo Sukari, the developer behind the sprouting Ideapark.
The connection between the Prime Minister and Ideapark raised, of course, a public outcry. Vanhanen angrily denied suspicions of any wrongdoing and said he did not even know having received € 10,000 from the developer for his last year's campaign.
It has turned out that the KMS, founded in early 2007, just before the parliamentary elections, donated well over € 500,000 to the campaigns of tens of candidates, most of them then elected MP's and many entering the Government as ministers. The Finnish media, doing a lot of groundbreaking journalism, has reported that behind the KMS there are also businessmen known for searching fast returns and roots in tax havens abroad.
A peculiar sidebar to the story, extraordinary even as such in Finnish terms, was revealed by the evening paper Iltalehti. It broke the news that one of the KMS financiers, Mr. Kyösti Kakkonen, had been nominated for a rare honorary title, eagerly sought after by business executives. The application had been signed by a venerable selection of top politicians, many of them having received donations from the KMS in 2007. On top of it all, the application was filed two days after the election results were confirmed. The chairman of the committee making decisions on different honorary titles is, well, the Prime Minister. He said he would probably incapacitate himself in the matter. After the uproar, while writing this on May 25, it seemed self-evident the title would not be granted.
New rules, new atmosphere
As it is often said, every cloud has a silver lining. The events seldom seen in Finland have started to clear the air. It is quite possible that the rules covering campaign financing will be tightened partly already during the summer and in more detail by next year, as recommended by GRECO.
The reason for hurry is that local elections are to be held in late October. It looks certain that at least in local elections the threshold of donations above which the identity of the donor must be disclosed will be lowered to € 1,000 from the present € 1,700. In the new atmosphere it can be taken for granted that many candidates in the local elections will open their campaign records to the full and that the media coverage will be relentless. The real test for the new rules will be next year's elections to the the European Parliament.
It remains open whether the parties will agree on a limit to individual donations, proposed by the opposition parties and objected most by the Conservatives. Such a limit does not exist now. Also the sanctions for breaking the rules are yet to be settled. Such sanctions do not exist now, either.
Anyway, the party of secretive political funding in Finland is over.
May 26, 2008