A housing association historically linked to the Center Party appealed for state-guaranteed loans after several corruption scandals.
The decision to cancel the loans was taken after allegations of questionable financial activity by the previous leadership of the Finnish Youth Foundation (Nuorisosäätiö) affiliated with the Center Party.
Former directors of the Youth Foundation Aki Haaro and Perttu Nousiainen are suspected of corruption and aggravated fraud, among other financial crimes, along with dozens of other suspects.
A police investigation is underway into the allegations.
“The decision we have taken is unusual, but I would like to remind everyone that the actions against the public interest have been particularly serious and the damage caused is considerable,” said the chief director of the Center for Finance and Development. Housing Finland (ARA), Hannu rossilahti, written in the press release of the organization.
The ARA’s decision will stand unless the Youth Foundation is able to repay 20 million euros in state-guaranteed loans within 6 months.
The future of the foundation in doubt
The Youth Foundation provides rental housing and housing assistance for young adults across the country and houses more than 4,000 residents.
Many of them are funded by ARA, a public financial body that provides loans to housing companies and associations. ARA’s decision to cancel loans to the Finnish Youth Foundation further questions the foundation’s future.
The Youth Foundation currently has subsidized loans backed by ARA for an amount of 132 million euros. This is only the second time that ARA has decided to cancel loans to non-profit entities.
The first time such a decision was taken was related to the financial discrepancies of the Riihi Foundation in Oulu, when the former president of the foundation was jailed for several cases of serious fraud.
Jari Wool, chairman of the board of the Youth Foundation, called ARA’s decision “unfortunate and incorrect”.
“It is exceptional that the ARA takes such drastic measures, especially since our appeal to the administrative tribunal has not yet been processed,” Laine said.
ARA previously canceled the association status of the Youth Foundation’s affiliates, and the latest loan cancellations are part of those measures. The Youth Foundation appealed the decision to the administrative court and asked ARA to restore the status of its subsidiaries as non-profit organizations.
The Youth Foundation now has several options: bankruptcy, corporate restructuring or making some of its apartments available.
“We still have time until next summer to explore the options,” Laine says.
The majority of the Youth Foundation apartments are utilities and are subject to ARA restrictions. This means that they will continue to be rented out to young people, whether the owner of the apartments changes or not.
Therefore, the decision taken by ARA on Monday will not have a direct impact on the residents of the Youth Foundation.