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Finland commercial crime feature financialcrime money laundering Russia border crime.

BY its own lights Finland is a model of Nordic virtue and is snooty about crime in neighbouring countries round the Baltic. But Interpol begs to differ, ranking Finnish criminality as high for an industrialised economy. David Haworth, mugged for his mobile in Helsinki, describes this paradox.

THE NEWLY installed president of Nokia, Olli-Pekka Kallasvou, recently caused eyebrow-raising headlines when he was fined Euro 31,000 for importing a range of luxury goods from Switzerland without paying tax or customs duty. He had collected the VAT refund at Zurich airport but failed to declare a Euro 600 pair of shoes and antique silver items on arrival in Helsinki.

Though inevitably a high profile case, the incident was small beer in a country reckoned to lose some Euro 3 billion to the grey economy and economic crime every year. Wedged in the northeast extremity of the European Union (EU), Finland has a 1,300 kilometre border with Russia which extends from the Gulf of Finland very nearly to the Arctic Sea. It has a mere 5.2 million population in an area which made the nation geographically the sixth largest in the EU when it joined in 1995.

Even now, distance plus its fiendishly opaque language, gives this chilly cul-de-sac a slight air of mystery to the outsider.

And indeed, Finland is a club, its business community claims: and like all good clubs, it has bad hat members. But the regulation of their activities--even interest in them--has varied over the past twenty years.

Right now the police and government have again made financial crime a priority, aided by a growing popular recognition that the phenomenon is a growing "real" crime and not just opportunist self-interest.

Despite EU membership, big business--maybe because of its clubbiness--is still subject to the cartel temptation, for instance. For example, the UPM Kymmene paper company, a veteran of competition violations, was fined Euro 56 million by the European Commission last November for a plastic bag cartel.

A greatly embarrassed chairman of the Finnish Industry and Employers' Association (EK), recently resigned that post because, as CEO of construction giant Lemmikainen, Heikki Pentti was accused of orchestrating an asphalt cartel. The case is still in progress.

Also, fake invoicing has recently hot headlines in Finland. One scam hit up 100,000 companies allegedly raising cash for cancer victims; this fraud ended when the perpetrator was murdered by an associate. Another 200 companies and associations were taken in the same way by other fraudsters claiming to support war veterans.

Another symbol of the prevalence of financial crime in Finland is the second trial (continuing at the time of writing) of the so-called Interbank affair which concerned share dealings where cash was moved around offshore and undeclared.

The allegations go back to the late Nineties when large sums nominally changed hands but which constituted, according to the charges "aggravated fraud by a debtor in connection with bankruptcy"--in other words moving cash out of the creditors' reach, a common but serious crime in Finland, which ironically comes top of the Intrum Justitia league table for prompt bill paying.

Two brothers, Dr Kari and Jussi Uoti, are accused of being at the centre of a conspiracy alleged to feature embezzlement and accounting offences involving millions of Euro, for which in earlier proceedings they received six years and 5 years, eight months respectively out of a possible maximum of seven years.

What is striking, however, (more headlines) is that among the nine co-defendants accused of money laundering associated with these crimes were an entertainment magazine editor and Ari Hutamaki, a professor of law at Lapland University. The current proceedings involve similar charges to the first trial; amazingly, the new accusations relate to activities which Kari Uoti was able to continue while still in jail for the first lot.

A consequence of some economic crime is that a gaggle of Finns banned from running businesses because significant back taxes or other faulty debts are involved, turn up in linguistically-close Estonia to resume trading under a different label. There are currently close to 300 such exiles, many from the construction industry, according to the Finnish Trade Union Federation.

Because of Russia's contiguous border, the Finns are adept at blaming others for illegal activities. It's the foreigners' fault, they invariably say. There is even a special phrase for it: "Eastern crime", meaning offences committed in Finland by you-know-who. But this is to overlook the degree of cooperation between Russian and some of the 22 known Finnish gangs of organised criminals. For linguistic and other equally practical reasons Russian crooks need the assistance of Finnish counterparts. There is plenty of Finno-Russian "friendship", especially in the thicket of sub-contracting. In other words, the primary contractor has no idea who some of his ultimate beneficiaries are because work has unwittingly been sub-contracted to underworld operatives eager to have a legitimate front.

Moreover, as there are some 1,200 "Eastern" companies legitimately established in Finland their links to indigenous firms makes tracking cash a complex matter. A commonplace activity is double billing arrangements.

As a "favour" a Finnish supplier gives his Russian customer two invoices, a real one and a low one. When the goods cross the border the Russian authorities see only the lower bill. It is much less value than the products are really worth so the deal attracts much lower import taxes.

There's irony in this fabric of ambiguity. The Russian frontier is the Union's most tightly controlled; even a bear's intruding nose is enough to set the alarms jangling, swiftly bringing the Finnish Frontier Guard to the spot.

A Finn, Col. Ilkka Laitinen, was last year appointed chief of the EU's external borders agency; who better?

But there is a constant "leaking" of undesirable elements through authorised road/rail crossing points and also through the Estonian capital, Tallinn, by ferry or hydrofoil one hundred kilometres across the Gulf, a choke point for authorities' police and customs vigilance on the look-out for drugs and people trafficking.

That said, unexpectedly, perhaps, money laundering represents only 10% of financial crime. This can be taken as a tribute to the so-called Virke Project which has tightened cooperation between the police and regulatory authorities with assistance from the Financial Action Task Force on Money Laundering (FATF).

When Finland assumes the EU presidency in the latter half of 2006 it will seek to give fresh strength to the fight against organised crime--a fight which was, after all, given political coherence at an EU meeting staged in Tampere, north-west of the capital, seven years ago. So, it's not inappropriate that the European Institute of Crime Prevention and Control (HEUNI) should be headquartered in Helsinki, for reasons good and bad.

BY DAVID HAWORTH, in Helsinki
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Author:Haworth, David
Publication:International News Services.com
Date:Jan 1, 2006
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