Editorial | Germany is trying to make Finland pay for its mistakes

Editorial|Editorial

For Finns for large companies, the extra money received quickly can be a problem.

It’s starting to burn salary managers, for whom big business deals made abroad are also an entrance ticket to bigger circles. There are things to buy in the world, but risks and the ability to digest mergers and differences in corporate cultures are sometimes poorly calculated and predicted.

There are several expensive examples of this in Finland’s economic history. There are Stora Enso’s U.S. stores, Sonera’s trip to Germany and the television channel stores of Sanoma, which also publishes Helsingin Sanomi, in the Benelux countries. Nor did Nokia’s deals with Siemens and Alcatel go smoothly.

Now the energy company Fortum, of which the Finnish state owns 51 percent, is in trouble. Its German subsidiary Uniper makes a loss of tens of millions of euros in gas brokerage every day, when the Russian gas company Gazprom does not supply it with the agreed amount of natural gas. Uniper has to purchase gas at a higher price elsewhere, but cannot transfer its additional costs to the prices.

Uniper’s position in Germany’s gas distribution is central, so for example German Minister of Economy Robert Habeck has demanded Fortum to participate in the rescue of Uniper. Fortum has already supported Uniper with the group’s internal financial arrangements, but Germany is pushing the issue to a political level.

Owner guidance minister Tytti Tuppurainen (sd) is scheduled to discuss the situation in Berlin on Thursday. Up until now, the state has incurred calculated losses due to Fortum’s stock market listing, and in addition, the annual dividends of half a billion will almost certainly not come. In the worst case, the state may even have to capitalize Fortum. Fortum’s situation is made worse by the fact that it is currently in the process of selling its Russian operations.

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Uniper’s problems are the result of German politics.

When In 2017, Fortum set out to buy Uniper, its management raved about Uniper’s hydropower and the nuclear power plants it runs in Sweden. Critics pointed out even then that coal and natural gas played a central role in Uniper’s business. However, representatives of the state owner and Fortum’s management played down the risks.

Fortum invests in the energy of the past. At the same time, it tied itself to Germany’s energy policy, which was based on the belief that Russia would not use energy as a weapon. Germany had become even more dependent on Russian gas than before when it had decided to wind down its nuclear power after the 2011 Fukushima nuclear power plant accident.

Uniper’s problems are therefore the result of German politics. Now Germany is trying to transfer the price of the failure and the realization of the Russian risks to Finland as well. Finland must start from the assumption that there will be no more to pay than is absolutely necessary. So far, very little of the mess can be attributed to the German taxpayer.

Of course, for too long Finland shared Germany’s belief that Russia could be bound by interdependence. The Russian leadership just never thought so.

Fortum’s problems arise from the triggering of conscious risks. They were taken by highly paid managers. The price of benefits is the loss of reputation if things go wrong.

Ownership management has also been blue-eyed. Fortum went to Russia during Jyri Häkämie’s ministerial tenure, sold the electricity networks to Caruna during Pekka Haavisto’s tenure, and bought Uniper during Mika Lintilä’s tenure with the money received. Even Tuppurain became concerned only after the crisis started. The state cannot intervene in everything in the company, but there is already something to learn from the adventures.

Pekka Lundmark, CEO of Fortum at the time of Uniper’s purchase, and Sari Baldauf, chairman of the board, bear the heaviest responsibility. It’s a small consolation that no one remembers even Jukka Härmälä, who squandered Storan Enso’s billions to America.

The editorials are HS’s positions on a current topic. The articles are prepared by HS’s editorial department, and they reflect the magazine principle line.