Funding scandal rattles Finland

A political funding scandal in Finland has paralysed the government as it tries to steer the country out of recession, and risks denting the country's squeaky-clean image abroad.

Almost daily for the past few months, media have feasted on the disclosures of politicians who received thousands of euros or more in funding from businesses and unions for presidential elections in 2006 and parliamentary elections in 2007.

While no politicians have been charged, and the government is not expected to fall, the amount and breadth of the funding have shocked Finns used to seeing their country as a clean-cut global citizen. The country's top parties - The Centre Party, Conservatives and Social Democrats - have all been touched.

"From a government point of view it's already paralysed, and their ability to function 100 per cent is permanently harmed," said Markku Mantila, editor in chief at regional daily Kaleva.

"... That's a shame as we are in a bad economic situation and we needed a government to solve the problems," he said.

The scandal is the biggest in Finland, which ranked fifth in Transparency International's 2008 Corruption Perceptions Index, since Prime Minister Anneli Jaatteenmaki resigned in 2003 over leaked Iraq war documents she received.

It comes as the export-driven country tries to claw its way out of the recession, with the finance ministry expecting the economy to contract a sharp six per cent in 2009 and grow only slightly next year.

The latest details to emerge this week showed that a youth charity that received hefty amounts of funding from the state-owned gaming monopoly donated to the campaigns of politicians including Prime Minister Matti Vanhanen.

The charity was chaired by an MP from Vanhanen's Centre Party, who stepped down from the position this week saying he was not aware of the scale of donations made.

Opposition parties, led by the SDP, yesterday demanded that Mr Vanhanen resign.

Commentators said the steady flow of details, while surprising, confirmed suspicions about where parties received their funding.

"There has been a close connection between politicians, different charities and companies, and this goes back to the Soviet era," said Jan Sundberg, professor of political science at the University of Helsinki.

"Everybody figured this was going on, but we haven't really had the data or had our finger on it because all the big parties were more or less involved in it," he said.

Despite the opposition's call for Mr Vanhanen to resign and comments from the SDP leader, Jutta Urpilainen, that a snap election could not be ruled out, observers said the four-party coalition government would likely sit until 2011 elections.