Crimes | Prosecutor: Kohuhytiö acquired millions of loans with lies, demands imprisonment for the founders of Uros

Prosecutor demands the founders of the technology company Uros Jyrki Hallikainen and To Tommi Uhar unconditional imprisonment for aggravated aid fraud. The trial at the Oulu district court began on Tuesday.

The case concerns product development loans and grants worth a total of more than six million euros, which Uros, which has since gone bankrupt, received in the 2010s from Tekes at the time, or now Business Finland (BF). According to the prosecutor, Hallikainen and Uhari withheld information from Tekes and gave it false information in order to get the money.

According to the prosecutor, the defendants concealed from Tekes, among other things, an agreement according to which Uros acted as a contract product developer for its Luxembourg subsidiary and in which all intellectual property rights arising from financed projects were sold to the subsidiary.

In addition, according to the prosecutor, the defendants gave Tekes an “obviously misleading” picture of the income expectations and social effects related to Uros' projects.

According to the prosecutor, in the Tekes applications Uros' expected income in 2015 was stated to be 300 million euros and in 2016 already 500 million euros. The applications also stated that in 2016 Uros would employ 400 people.

In reality, Uros's business essentially consisted of invoicing to subsidiaries and was priced in such a way that Uros' turnover in the years 2012–2016 was just under 3.3 million euros at most, and there were 27 employees in 2016, the prosecutor writes.

I suspected at the time of the crime in the years 2011–2015, Uhari was the company's CEO and Hallikainen was the chairman of the board. Uhari left Uros in 2018, Hallikainen has been the main owner of Uros.

Both deny that they hid information when applying for development loans worth millions of euros for the company.

In his written response to the district court, Hallikainen considers that the right to prosecute gross aid fraud has expired.

According to Hallikainen, Tekes also knew that Uros' technology would be licensed internationally. Hallikainen says that the business plans presented to Tekes showed that in order to succeed in competitive and global licensing, a subsidiary operating in the Benelux countries should be responsible for it. He says that he also told in the financial negotiations in 2011 that the intellectual property rights are owned by a Luxembourg subsidiary.

Both Hallikainen and Uhari are of the opinion that the transfer of intellectual property rights within the group did not violate Tekes' financing conditions.

“[Immateriaalioikeudet] or their ownership did not come up during the prosecution at any point in the negotiations or correspondence with BF in which Hallikainen has been involved. On behalf of BF, it was always emphasized that the important thing is how the engineers dismissed from Nokia would find employment in Oulu”, Hallikainen's answer reads.

Also, according to Uhar, Tekes never asked Uros for any additional information about patents or their licensing during the years.

“BF's actions in the criminal investigation have been purposeful and even misleading, when, for example, it has not discussed in its investigation request the absolutely central aspect of Tekes' financing terms regarding the transfer of patents — It is obvious that BF has decided to make the investigation request only because Uros has received negative publicity , in which case even BF's own activities could be critically evaluated,” Uhari writes.

Male According to Hallikainen, the income expectations or employment effects were a forecast based on the experience and know-how he had accumulated up to that point.

“Furthermore, business growth has been slowed down by the fact that BF granted Uros oy significantly less funding than what Uros oy applied for,” the response reads.

Hallikainen also disputes BF's claim for damages. According to him, all the funding received was spent on Uros' business.

“During the time of the indictment, Hallikainen has not raised a salary or dividend from the Uros Group, but has financed it by the end of 2021 with more than 30 million euros. Hallikain currently has no income at all.”

Uhari points out that it is by no means exceptional that a company that received funding from Tekes does not achieve its financial goals.

“Of course, the fact that the company does not achieve the results it has aimed for cannot be a crime,” his answer reads.

The trial at the Oulu District Court began on Tuesday with a preparatory session, which the defendants were not obliged to attend. The main hearing is scheduled to begin in April. Gross aid fraud is punishable by a minimum of four months and a maximum of four years in prison.

Male was placed in bankruptcy at the beginning of 2022. In its bankruptcy decision, the district court considered that the company was other than temporarily insolvent as intended by the Bankruptcy Act. According to the court, at that time Uros had debts of at least 13.5 million euros and only about 14,000 euros in cash.

STT said in the fall of 2021 that there was probably no corresponding real business behind the great profits reported by Uros. At that time, STT also reported that Uros had only paid part of the interest on its Business Finland loans in almost ten years.

According to Uros's bankruptcy estate, the Luxembourg subsidiaries were subsequently used to move Uros's assets out of the reach of creditors.

In December 2020, Uros sold the subsidiaries to the group's parent company Uros Ag for a total purchase price of around 25,000 euros. According to the bankruptcy estate, the deals were significantly underpriced, as the subsidiaries had a total of more than EUR 320 million in assets on their balance sheets at the time of the deals.

The purchase prices were also never paid, but were recorded in Uros' accounting as receivables from the sold subsidiaries.

In October of last year, the Oulu District Court ordered the cancellation of the business transactions. The district court decided the case with a unilateral verdict, because Jyrki Hallikainen, who was considered the representative of Uros Ag in the case, did not respond to the bankruptcy estate's claim within the deadline.