Finland is in crisis – in transparency crisis. National Railway VR, national airline Finnair and national pension fund system are under attack because of lack of transparency.
Transparency International – the global anti-corruption organization ranks Finland one of the least corrupted nations in the world. This reputation has now been questioned by the Finns themselves.
It has been revealed that the security department of the National Railway VR spies on its employees. One person has even been secretly recorded on a video because she was suspected to be on sick leave without being ill.
At the same time the CEO of Finnair Mika Vehviläinen made a personal business deal with his Chairman Harri Sailas, the CEO of a major pension fund Ilmarinen. Vehviläinen sold his luxury apartment to Ilmarinen with a good price as he couldn’t find anyone else to buy the flat. Finnair then leased the flat from Ilmarinen for Vehviläinen.
Finnair is a major customer to Ilmarinen. Additionally Ilmarinen is building new headquarters for Finnair. This is not all. Finnair is a company in crisis. It was revealed that it paid almost 3 million euro stay bonuses to its 18 bosses at the same time it demanded pay cuts from the employees. Bosses were paid in secret, pay cut demands were public.
Dealing and wheeling has angered the Finns and the government. The minister responsible for the governance of state owned companies, Heidi Hautala, announced that the most members of the board of Finnair will be sacked.
The biggest problem seems to be that Finland has too few credible people at the top of the business elite, especially at the helm of state owned companies. There is a lot of discussion about structural corruption because same individuals just rotate between companies and switch board seats between themselves. Also remuneration practices are all but transparent.
People feel that huge amounts of bonuses, options and other methods of rewarding the top management are unfair and taken as an insult to ordinary workers. It’s been shown in several studies that big rewards don’t always bring the big results. Millions and millions have been wasted by hiring the wrong kind of bosses. In most cases it’s the owners of companies that accept the generous pay packets. When it comes to listed companies in which the state is a major stockowner the public outcry grows easily out of proportion – for the right reason.
Greed is not good anymore. Business leaders should be able to understand the public opinion at the times when capitalism is in crisis. There is a real danger that the market economy and liberalism are accused of something they are not guilty of. Liberalism from Adam Smith to Friedrich Hayek has always emphasized “positive greed” which works for the good of society while supporting individual actions. “Negative greed” needs to be controlled by law and order to prevent damage to capitalism.
Prevention and control of monopolies is one form of negative greed and on individual level this could be interpreted as control of compensation without limits. Positive greed, important as it is to our well being, can be maintained only by full transparency and public control.