Investigating alleged misuse of funds among key principles of Finland’s development cooperation
Misuse of development cooperation funds has been the subject of much public debate recently. One of Finland’s key principles is to investigate all alleged misuse of funds and to recover any misappropriated funds, according to Director General of the Department for Development Policy Titta Maja-Luoto.
What are the recently reported cases about, Director General Titta Maja-Luoto?
“The Ministry for Foreign Affairs always publishes information on the recovery of development cooperation funds alongside the financial statements. It is part of the transparency of Finland’s development cooperation.
“The news reports concerned projects where alleged misuse have been investigated and recovery of misappropriated funds has been ordered. This shows that our control is working.
“In one of the cases there was even sexual abuse. Although no information was publicised on the case to protect the privacy and legal safeguards of the victims, the Ministry immediately suspended all payments to the project and initiated investigations. When the investigations were concluded, the Ministry stopped financing the project.”
How does the Foreign Ministry get reports on alleged misuse of funds?
“All those engaged in development cooperation are obligated to report to the Foreign Ministry if they detect or suspect any misuse of funds. The Ministry receives reports through our development cooperation partners and through our own monitoring and audits. We set up a website, väärinkäyttöilmoitus.fi, years ago to offer an easy channel where anyone can report their suspicions, even anonymously. In recent years, we have received from 20 to 25 reports annually.”
How does the Foreign Ministry tackle alleged misuse of funds?
“The Ministry takes all alleged misuse of funds very seriously, and we investigate each case. Once we are aware of an alleged misuse, we assess how serious the case is and decide what to do next. The next steps could include a special audit, a suspension of payments or a recovery of funds. In Finland, the National Bureau of Investigation (NBI) investigates all alleged offences. Sometimes it takes years to investigate a case and take the necessary legal action.
“It is important to bear in mind that misuse of funds occurs in only a fraction of development cooperation projects. Our claims for recovery totalled EUR 106,170 in 2021, compared to EUR 151,550 in 2020 and EUR 70,689 in 2019. Most of these funds have already been repaid.”
How does the Foreign Ministry monitor the use of development cooperation funds?
“It is part of the Foreign Ministry’ official duties to monitor, assess and oversee development cooperation. The aim is to ensure appropriate use of funds, to develop activities and to produce information on the results of development cooperation.
"Besides monitoring development cooperation as part of the Ministry’s official duties, we regularly perform independent audits of ongoing projects. If we find problems, we seek to redress the situation.
“The National Audit Office of Finland, the Foreign Ministry’s Unit for Internal Audit, and the OECD, among others, evaluate regularly the administration of the Finnish development cooperation funds. According to the National Audit Office, development cooperation is one of the most closely controlled and evaluated activities of the central government.
“We publish up-to-date, detailed information about Finland’s development cooperation funding at the website openaid.fi.”
How is the Foreign Ministry preventing misuse of funds?
“Our risk management policy for development cooperation defines how we identify, assess and manage risks. We take into account potential risks already at the planning stage. Our method is effective, but it is not possible to prevent all misuse even with the keenest foresight. The fact that development cooperation is conducted in fragile and unstable conditions aggravates risks of misuse. One of the objectives of development cooperation is to make such conditions more stable.”
Why does Finland engage in development cooperation despite the risks?
“Development policy is an essential and indispensable part of foreign and security policy. Finland is helping solve global problems as part of the international community. Finland’s development cooperation strengthens our own international position.
“No one needs development cooperation in easy and stable conditions. The importance of development policy for international cooperation has been further accentuated by the recent years’ crises, such as Russia’s invasion of Ukraine and the COVID-19 pandemic.
“The Development Policy Results Report, which the Foreign Ministry submitted to Parliament, in November shows that Finland’s long-term development cooperation has generated significant results. The report shows that an increasing number of girls finish basic education in Finland’s partner countries and that we have supported business activities and created millions of decent jobs through our partnerships. These and many other results are significant for Finland’s future, too.”