Shareholders’ meeting instructs Finavia to address the derivatives contracts
The annual general meeting of Finavia Corporation was held in Helsinki on 31 May 2016. The meeting adopted the financial statements for 2015, discharging the Board of Directors and Chief Executive Officer from liability. The seven current members of the Board were reappointed for 2016.
Finavia’s Board of Directors is chaired by Harri Sailas. Stefan Wentjärvi, Nina Kiviranta, Erkka Valkila, Katja Keitaanniemi, Jarmo Kilpelä and Carita Pylkäs, the staff representative, will continue to serve on the Board of Directors. Ernst & Young Oy, Authorised Public Accountants, were appointed Finavia’s auditor, with Mikko Rytilahti, APA, CPFA, serving as the auditor in charge.
The company will distribute EUR 4.6 million in dividends. Additionally, the company will make capital repayments to the State for the parts of the weather monitoring hardware and software owned by the company and completed in 2015, with a fair value of EUR 1.9 million.
Minister of Transport and Communications Anne Berner thanks the company for its positive financial performance and the continued increase in revenue.
“The company put in a good performance and the passenger volumes continued to grow. I’m pleased to note that the number of travellers passing through Helsinki-Vantaa Airport reached an all-time high of 16.4 million in 2015. From the owner’s point of view, the company’s position is secure,” says Minister Berner.
As the owner of the company, the State seeks to promote and consolidate the company’s social responsibility performance. At the same time, the owner is called upon to ensure that the decision-making process in this state-owned company is appropriate and based on prudent and careful assessment. This has been, and will be, the policy pursued by the Ministry of Transport and Communications in its exercise of shareholder control in respect of Finavia.
“The meeting of shareholders instructed the new Board of Directors to make a careful assessment and pass a decision on filing any action for damages in respect of the losses incurred by the company as a result of the derivative contracts made in 2011. The company management is required to give due consideration to the decisions made in the course of the on-going police investigations and the preponderance of potential criminal charges, as well as assess the company’s prospects for claiming damages on this basis. Similarly, the management is to take into account the decision to be made by the Financial Supervisory Authority,” says Minister Berner.
In 2012, it transpired that Finavia and its predecessor, then a government enterprise, had made high-risk non-hedging derivative contracts. As a result of these derivatives, Finavia incurred a loss of EUR 34 million over the period 2009–2011.
The pre-trial police investigation in respect of the individuals who had signed the derivative contracts on behalf of Finavia were concluded on 27 May 2016. Based on the police investigation, there is reasonable cause to suspect that Finavia’s former Finance Manager and Deputy CEO committed an offence when making the derivate contracts. The case will be referred to the prosecutor for consideration of potential criminal charges.
Since last autumn, the ministry’s ownership steering department has made active efforts to ensure that the liability issues related to Finavia’s derivatives are thoroughly reviewed.
“A case like this investigation of the derivatives issue is highly exceptional in a state-owned company. The owner has been justifiably concerned about the decision-making capabilities of the company’s Board of Directors. As a responsible owner, the State has wanted to make sure that the company’s decision-making process is appropriate and based on prudent and careful assessment. The owner has not improperly interfered with the operational activities of the company it owns”, says Berner.
Previously, the Ministry of Transport and Communications had commissioned an impartial inquiry into its ownership steering activities for submission to the National Audit Office. The inquiry into corporate law issues was completed by Pekka Merilampi, attorney-at-law and senior judge. A key finding of the report is that shareholders are within their rights to issue instructions to the Board of Directors and that this does not constitute any improper interference with the operational activities of the company (Limited Liability Companies Act, chapter 5, section 2(2)). Creating the necessary preconditions for entering into negotiations and making decisions on contracts does not constitute interference with the company’s affairs.
The legal evaluation of the liability issues related to Finavia’s derivatives by the National Audit Office is due for completion in June. According to the information currently available, the Financial Supervisory Authority’s report on the actions of the banks in connection with the derivative contracts will be completed by Midsummer.
Inquiries: Minister of Transport and Communications Anne Berner, tel. (09) 160 28320
Correction on 2 June at 8.24 to the press release of 31 May 2016. The sentence "The former members of the Board of Directors will not face any charges." has been removed. The sentence may have given a false impression, since the former members of the Board of Directors are not under police investigation.