Finland

Finland Corruption Report

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Snapshot

Finland_250x148.jpgCorruption does not significantly impact businesses operating in Finland. The Finnish regulatory system is transparent, and administrative corruption is almost non-existent. The Criminal Code contains provisions against active and passive bribery, embezzlement, fraud and abuse of office, and persons and companies can be held liable for offenses. Facilitation payments are prohibited, while the propriety of gifts and hospitality depends on their value, the intent and the potential benefit obtained. The anti-corruption framework is generally well-enforced, but Finland has been criticized for not adequately investigating and prosecuting foreign bribery. Corruption is limited due to an administrative culture of transparency and openness, a strong system of internal and external controls, and the involvement of civil society in the management of public affairs. Isolated incidents of corruption and favoritism do occur, primarily at the local level, where the interests of businesses and local politicians are sometimes improperly linked in so-called ‘old-boys networks’.

Last updated: January 2018
GAN Integrity

Judicial System

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There is a low risk of corruption in Finland's judiciary. Irregular payments and bribes are perceived as extremely rare in the judicial system (GCR 2015-2016). Public polls reveal that citizens do not pay bribes to judges and that the judicial system is considered to be among Finland’s least corrupt institutions (GCB 2013European Commission, Feb. 2014). Over four in five businesses perceive the independence of judges and courts as fairly good or very good (JS 2017). Companies consider the judiciary effective in ensuring the transparent enforcement of commercial contracts, dispute settlements and challenging regulations (GCR 2017-2018ICS 2017). Around one in ten judges surveyed believes that judges in Finland are appointed or promoted on basis other than ability and experience (ENCJ 2017). Only very few judges express concerns about facing inappropriate pressure in their work (ENCJ 2017). Finnish judges must adhere to a set of ethical principles which include openness, independence, professionalism and impartiality (GRECO 2017). Finland has a political culture which prioritizes legal certainty, condemns personal conflicts of interest, and prevents public official from abusing their position (SGI 2017). In one instance, Finland's Prosecutor General Matti Nissinen was indefinitely suspended from his position over an investigation into whether he had personally lobbied for the purchase of educational services from a firm owned by his brother (OCCRP, Sept. 2017).

The OECD has been critical of the Finnish judiciary's ability to prosecute foreign bribery offenses, particularly pointing to a high acquittal rate (OECD 2017). The OECD recommends assigning foreign bribery cases to judges with specialized skills and providing more training in order to effectively prosecute the offense (OECD 2017). Enforcing a contract in Finland is significantly faster and less costly compared to the OECD high income country average (DB 2018). Finland is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and it is also a member state to the International Centre for the Settlement of Investment Disputes (ICSID).

Police

Finland's police sector is regarded as being free from corruption and enjoying a large degree of public trust (SGI 2017). Public polls reveal that citizens do not pay bribes to police officers and that police services are considered to be among Finland’s least corrupt institutions (GCB 2013European Commission, Feb. 2014).The reliability of police services to protect companies from crime is considered very high (GCR 2017-2018), and the government has effective mechanisms to investigate and punish police abuse (HRR 2016).

In an isolated corruption case, the former head of Helsinki's anti-drug police unit, Jari Aarnio, was found guilty of abuse of office, aggravated fraud and passive bribery in relation to the purchase of equipment and software on behalf of the Helsinki police department from a company in which Aarnio was an investor with decision-making powers (Uutiset, June 2015). In 2016, Aarnio was sentenced to ten years of imprisonment over the charges (YLE, Sept. 2017). Aarnio has maintained his innocence and was appealing the verdict as of the time of review (YLE, Sept. 2017).

Public Services

There is a low risk of corruption in Finland's public administration. Companies report that irregular payments and bribes almost never occur when obtaining public utilities, business permits, licenses and other related services (GCR 2015-2016European Commission, Feb. 2014). Finland's regulatory system is transparent, efficient and competitive (ICS 2017). Public administration in Finland is regarded as transparent and is characterized by high standards, relatively non-hierarchical structures, and little if any politicization of key civil service positions (EUACR 2014). In combination with social factors, this has contributed to a low level of corruption in public institutions (EUACR 2014). Companies may encounter some bureaucratic red tape when starting certain businesses (ICS 2017).

It takes less steps but significantly more time to start a business in Finland compared to the OECD high income average (DB 2018). Dealing with construction permits involves significantly more steps, but it also requires less than half the time required in other OECD high income countries (DB 2018).

Land Administration

Corruption in Finland's land administration is not considered a problem. Companies are unlikely to encounter corruption while interacting with land services, and no surveyed companies report of bribery when obtaining building permits (European Commission, Feb. 2014). Companies express high confidence in the government's ability to protect property rights in Finland (GCR 2017-2018). Private property may only be expropriated for public purposes in a non-discriminatory manner against reasonable compensation in accordance with international law (ICS 2017). Less than one percent of land acquired by municipalities is expropriated (ICS 2017).

The average time required to register property is higher than the OECD average, while the costs involved are in line with the average in other neighboring countries (DB 2018).

Tax Administration

There is a low risk of corruption in the tax administration. Companies do see tax rates as a problematic factor for doing business (GCR 2017-2018), but companies indicate that irregular payments and bribes are very rare in the process of tax payments (GCR 2015-2016). Likewise, public polls reveal that Finland's tax administration is free from both corruption and abuse of power, and that bribery almost never occurs during interactions with tax authorities (GCB 2013European Commission, Feb. 2014). The tax administration has provided tax officials with guidelines stating the latter's obligation to report suspected criminal offenses, including foreign bribery (ICS 2017). The Act on the Taxation of Business Profits forbids the tax deduction of bribes in Finland and abroad. 

The average time and cost required to deal with tax payments is lower than the OECD average (DB 2018).

Customs Administration

There is a low risk of corruption when dealing with Finland's customs administration. Companies indicate that irregular payments and bribes for customs procedures are extremely rare (GETR 2016). Companies give high scores to the efficiency and time-predictability of the clearance process (GETR 2016). Public polls similarly reveal that the Finnish customs administration is free from corruption and abuse of power, and that bribery almost never occurs during interactions with customs services (GCB 2013European Commission, Feb. 2014).

The time and cost required to comply with export regulations are higher than in other OECD high income countries, but the time and cost required to comply with import procedures is negligible (DB 2018).

Public Procurement

Corruption risks in Finland's public procurement sector are moderate to low. Companies perceive favoritism in the decisions of government officials and diversion of public funds as rare (GCR 2017-2018). Yet, a quarter of surveyed businesses believe corruption has prevented their company from winning a public tender in Finland in the past three years (European Commission, Feb. 2014). Finnish 'old boys networks', a system of informal relationships between businessmen and public decision-makers, are reported to influence procurement decisions, especially at the local level (TI 2017EUACR 2014). Municipalities often only have limited data about bids and work with strict deadlines, which creates opportunities for inappropriate rent-seeking (TI 2017). The European Commission has also emphasized the need to make public procurement decisions more transparent (SGI 2017). All construction contracts above EUR 150,000 have to be tendered (TI 2017). Companies are recommended to implement special due diligence procedures to counter corruption risks in the procurement process.

Natural Resources

Corruption is not reported to be an obstacle for businesses in Finland's natural resources sector (European Commission, Feb. 2014). Finland is among the group of governments that provide political, technical and financial support to the Extractive Industry Transparency Initiative (EITI), which aims to ensure accountability and transparency in the publication of extractive industry revenues and expenses.

Legislation

Finland's Criminal Code prohibits active and passive bribery, embezzlement, fraud, abuse of office, breach of trust and abuse of insider information. It criminalizes bribery between businesses, the bribery of Finnish and foreign public officials, and bribery through intermediaries (agents, consultants or other representatives). The anti-corruption laws are generally well implemented (HRR 2016). The OECD has criticized the lack of convictions of foreign bribery offenses (OECD 2017). Persons and companies are subject to criminal corruption offenses. The Criminal Code distinguishes between non-aggravated bribery and aggravated bribery, with the latter carrying penalties of up to four years’ imprisonment. A company can be held criminally liable for corruption offenses committed by individuals working on its behalf and may be ordered to pay corporate fines of up to EUR 850,000 for violations. Finland's law offers no distinction between bribes and facilitation payments, while the propriety of gifts and hospitality depends on their value, intent and potential benefit obtained. The Ministry of Finance has issued guidelines for civil servants regarding gifts, benefits and hospitality. MPs are not allowed to keep gifts exceeding a value of EUR 100. Other relevant legislation include the Political Parties Act, which requires candidates and parties to report campaign donations exceeding EUR 800 in local elections, and EUR 1,500 in parliamentary elections. The Act on Public Contracts provides for the debarement of bidders from competitive tendering if they have been convicted of a serious offense such as bribery. Bribes and other benefits given for an inappropriate purpose are not tax deductible according to the Act on the Taxation of Business Profits. There is no separate law granting whistleblowers protection, but whistleblowers may be granted some statutory protection under a number of laws (WLG 2016).

Finland is a signatory to the OECD Anti-Bribery Convention, the United Nations Convention Against Corruption (UNCAC), the Council of Europe’s Civil and Criminal Law Conventions against Corruption, and the Group of States Against Corruption (GRECO). 

Civil Society

In Finland, freedom of expression and access to information are constitutionally guaranteed and respected by the government in practice (HRR 2016). Media outlets and journalists operate freely, without political interference or other restrictions, although defamation remains criminalized (FotP 2016). The media plays a central role in uncovering and reporting on corruption cases (NISA 2012), and Finland's media environment is considered to be among the freest in the world (FotP 2017).

Nongovernmental organizations operate in Finland without restrictions (FitW 2016). Civil society organizations (CSOs) play a vital role in Finland, with around 75 percent of Finns belonging to at least one organization (NISA 2012). Many CSOs rely on state funding, and very few CSOs are active in anti-corruption matters (NISA 2012). CSOs are widely consulted when legislation is under consideration (SGI 2017).

Sources

Topics: Europe & Central Asia