The best tender won – or did it?

Finland performs well in international studies that measure the level of corruption in the society. According to the latest 2023 Corruption Perception Index report, the level of corruption is lowest in Denmark and second lowest in Finland. 

When measured in euros, corruption is a serious problem at EU level – approximately two billion euros are lost every year due to corruption. In Finland, however, corruption has traditionally not been considered a big problem, and Finland has a reputation of having little corruption. Unlike many other EU countries, Finland does not have a specific authority focusing on the prevention of corruption or any kind of comprehensive anti-corruption programme. Having said that, it does not mean that there would be no corruption in Finland. Instead, it has been acknowledged that corruption is not recognized as well as it should be. In Sweden, for example, corruption investigations related to public procurement procedures are common.

Corruption includes both unethical conduct as well as proceedings that meet the essential elements of an offence. One recognised risk area of corruption is public procurements, where corruption compromises the non-discrimination of suppliers and the real competitive conditions. All suppliers do not actually have equal opportunities to offer products or services if the underlying objectives of the procurement are contrary to public interest, for example due to dual roles of the people participating in the procurement or conflicts of interest.

Old boy networks and favourite suppliers

An old boy network refers to close relationships between a public servant and the representatives of a company, for example based on kinship, friendship or common background, political or otherwise. Relationships can be difficult to detect if the question is not of near kinship. Networks may also be unofficial and not necessarily related to official duties.

As a result of various connections, contracting entities may also incur favourite suppliers, i.e. supplier partners that repeatedly win public procurement procedures or are chosen as partners in direct procurements. Using favourite suppliers can be common in procurements where the value is so low that applying the Act on Public Contracts is not required. Procurements can also be divided into parts to stay below the procurement thresholds. Such procedures are unsatisfactory for taxpayers because they weaken the quality and efficiency of procurements, make it easy to overprice products and prevent new or innovative companies from entering the public market.

Objectives that are not in accordance with public interest may have many impacts during the life cycle of the procurement. The contracting entity may try to amend the terms and conditions of an invitation to tender to favour a certain supplier or, when giving quality points, emphasise factors that are known to be the strengths of the desired service provider. In the implementation phase of framework agreements, purchases may be made from a familiar contract supplier even if some other service provider is primary in accordance with the terms and conditions of the framework agreement.

In practice, it may be difficult for a competitor to affect the outcome of the procurement within the limits of the remedies of the Act on Public Contracts. According to established case law, the contracting entity has extensive discretionary power to determine the contents of the procurement. In a written appeals process, it is challenging to allege that there are no grounds for the qualitative criteria used in the comparison or that unreasonable emphasis is put on some qualitative criterium in order to have the contracting entity’s favourite tenderer win the procurement procedure.

Corruption may meet the essential elements of an offence

In many cases, only proceedings that meet the essential elements of bribery offence are understood as corruption, even though corruption is a significantly more extensive phenomenon. While actual bribery offence investigations are relatively rare in Finland, such matters may come under investigation if, for example, there are suspicions of fraud or misuse of the company’s funds. When it comes to public officials, corruption may be investigated as an offence in public office, such as abuse of public office or violation of official duty.

Bribery offences typically concern some sort of undue favouring or giving and receiving undue advantage. Undue advantage may be monetary but also a favour in return. The advantage may be realised either immediately or later. In practice, it may be difficult to confirm suspicions of undue advantage or undue favouring in a public procurement procedure. Actual documentary evidence of corruption is rarely available to parties suspecting corruption. Nonetheless, taking the matter further does not require full proof of corruption.

If there is reason to suspect undue advantage or favouring, there should be a low threshold for bringing up the observation in the organisation, for example through a whistleblowing channel. Irrespective of how the suspicion of corruption is raised or the observation made, the company should start an internal investigation. If the suspicion is justified, a request for an investigation must be made to the criminal investigation authority. The same applies to a situation, in which there is reason to suspect corruption in public procurement processes, and the threshold for making a request for an investigation should not be set too high. Due to the police’s investigative powers, the criminal investigation authority has much better opportunity to obtain the necessary evidence than normal citizens or the tenderers participating in the procurement procedure. In police investigation, it is possible to investigate devices and get documentary evidence that private actors cannot get. It is noteworthy that meeting the essential elements of a bribery offence does not require that actual damage occurred. This means that even if no damage can be identified, a request for an investigation should not be omitted on this basis alone.

There is a legislative project pending concerning trade in influence. The objective is to make trade in influence an offence and thus affect structural corruption in Finland. In practice, the idea is that the middleman could be charged for trading in influence if the middleman influences or claims that they can influence a public official and gets undue advantage from the party giving the advantage.

As a conclusion, it can be stated that in addition to unethical conduct, corruption may even be a serious offence. Transparency is the most efficient method to prevent corruption, and instead of downplaying the significance of a corruption suspicion, it is a good idea to encourage reporting suspicions, investigate suspected corruption cases within the company and in public procurement tender processes and request an authority investigation, when necessary. With these measures, it is possible to ensure an appropriate operational culture in the company and prevent market distortion.