1. Conference on ‘Governance and Board Effectiveness in Public
Sector Enterprises’ April11, 2012

2. State Ownership Steering- The Finland
Case Study
By:
Olli V. Virtanen
Virtanen Associates Oy
Virtanen Associates Oy

4. Background in Finland
 After the WW2 state involved in heavy industries
 Forest industry, metal and engineering, mining,
fertilisers, tele…
 SOEs accounted for about 20% of GDP (now 5-7%)
 Companies poorly run, heavily in debt, state budget
financed, and helped with periodical devaluations
 Wake-up in the 1980s
 Government statement on profitability in 1982
 Concern over balance sheet and governance
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5. Development phase (late 80s, early 90s)
 Politicians recognised and approved development
 Clean-up on Board of Directors
 Abolishment of Supervisory Boards
 Strengthening of the balance sheet
 Stock market listings (SOEs)
 No wholesale privatisations
 Gradual expansion of ownership base
 International capital markets
 Last restrictions on foreign ownership abolished in -93
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6. Structure of state ownership steering
126 PARLIAMENT 74
OPPOSITION
GOVERNMENT
PRIME MINISTRY OF
MINISTER’S DEVELOPMENT MINISTRIES
OFFICE AID
MINISTER IN CHARGE
OWNERSHIP
STEERING DEPT.
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7. CATEGORIES OF STATE HOLDINGS
Strategic interest
Investor
interest
Companies with Companies with
Strategic Special
importance assignment
s

8. STRATEGIC INTREST
INVESTOR INTEREST Companies with strategic Companies with special assignments
importance
COMPANIES OPERATING ON MARKET TERMS SPECIAL ASSIGNMENT COMPANIES
1. OWNERSHIP STEERING UNDER THE PRIME MINISTER’S OFFICE 2. OWNERSHIP STEERING UNDER SEVERAL
MINISTRIES
Group 1 a Group 1 b Group 2
Altia Oyj Arctia Shipping Ltd) Alko Inc STM
Arek Oy Boreal Plant Breeding Ltd Arsenal Oyj VM
Art and Design City Helsinki Oy Ekokem Oy Ab Certia Oy OKM
Destia Ltd Fingrid Oyj CSC-IT Center for Science Ltd OKM
Edita Plc Finnair Plc Finavia Corporation LVM
FCG Finnish Consulting Group Oy Finnish Seed Potato Centre Finnpilot Pilotage Ltd LVM
Helsinki Business and Science Park Ltd Ltd Finnvera Plc TEM
Kemijoki Oy Fortum Corporation Governia Oy VNK
Mint of Finland Ltd Gasum Corporation Hansel Ltd VM
Opetusalan koulutuskeskus Educode Oy Itella Corporation HAUS Institute of Public Management Ltd VM
Raskone Oy Municipality Finance Plc 1) Horse Institute Ltd OKM
(11) Meritaito Ltd Solidium Oy VNK
Motiva Oy Suomen Erillisverkot Oy, State Security VNK
Neste Oil Corporation Networks Ltd
Patria Holding Oyj Finnish Aviation Academy Ltd OKM
Suomen Lauttaliikenne Oy Finnish Industry Investment Ltd TEM
Suomen Viljava Oy Tietokarhu Oy VM
Vapo Oy Finnish Fund for Industrial Cooperation Ltd UM
VR-Group Ltd (FINNFUND)
(18) Veikkaus, Finnish Lottery for Finns OKM
Yleisradio - Finnish Broadcasting Company LVM
Yrityspankki Skop Oyj
(20) VM

9. Key principles of state ownership steering
 No separate state ownership code
 Principles of ownership in Government Resolution
 Separation of regulatory and ownership functions
 In listed companies no state priviligies
 Commercial companies run on commercial basis
 Efficiency and profitability
 State support measures equal to all
 In all companies professional non-executive board
members
 No politicians, maximum one civil servant
 Candidate Bank
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10. Responsibilities of the Ownership Dept.
Source: Ownership Department
 Located in the Prime Minister's Office, but not under
the Prime Minister
 Directly accountable to the Minister responsible for
Ownership Steering
 Ownership strategy, analyses and monitoring, legal
matters and communications
 Independent organisation enables sufficient ability to
react and exercise criticism
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11. State role in SOEs
OWNERSHIP STEERING
CS CHAIR
1
Chinese wall
CS APPOINTED CS
2
2 MEMBER
OWNERSHIP SOE
STEERING BOARD
DEPARTMENT
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12. Premises and decision making
Source: Ownership department
 Essential legislation, corporate governance, government
resolution and statement by the Cabinet Committee
 Parliament sets shareholding limits, allocates budget
resources and approves incorporation arrangements
 Decisions on sales and acquisitions and on the overall
governing principles are made in government plenary
sessions
 The Minister responsible for Ownership Steering exercises
the right of action and is accountable to the Government
and Parliament
 Companies operating on market terms are under the
Ownership Steering Department in the Prime Minister's
Office
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13. Lessons learned
 Pragmatism
 Take your time
 Motivate population (voters)
 Focus on governance
 Define categories for different interests
 Find best people
 Remember national interests
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14. Steps forward
 Step One
 Owners will = Political will
 Categorisation
 Professionalism roles and responsibilities
 Legal framework
 Code
 Step two
 Competence, training
 Evaluation
 Driver’s licence
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15. Olli V. Virtanen
Virtanen Associates Oy
Hiidenkuja 6 B 4
02750 Espoo
Finland
Tel. +358-500-600462
olli.virtanen@virtanenassociates.com
www.virtanenassociates.com
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16. Thank you
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