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Keva managing director resigns in wake of benefits scandal

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The managing director of Keva, the €35.3bn local government pension institution of Finland, resigned late on Friday night in the wake of a scandal focusing on her fringe benefits and personal expenses.

Keva insures 1.3m Finns working, or having retired, from jobs at the local government, the state and the Evangelical Lutheran Church of Finland.

Merja Ailus’s resignation agreement states that the details of the discussions between Ailus and Keva’s board late Friday night – i.e. the actual reasons why Ailus agreed to resign – remain confidential.

However, the board’s decision to let Ailus go and pay her a compensation of €303,500 was based on a “lack of trust”, which emerged among board members after Finnish media accused Ailus of charging the institution for some of her personal expenses, failing to inform the tax office of the full value of her employee-sponsored flat and receiving child benefits from two countries simultaneously.

On 10 November, Finnish media reported that Ailus’s “fringe benefits” included two luxury flats in central Helsinki and a brand new BMW.

The reports alleged she failed to declare the full value of the flats to the tax office, and that “tender rules had been bent” in the acquisition of the BMW.

When starting at Keva in 2009, Ailus reportedly requested to live in a €2.3m flat and last year requested an increase of €6,100 on her monthly salary of €18,900.

Last week, local media also came out with claims that Ailus received child benefits from Finland and Norway simultaneously for eight years, which Norwegian officials are now claiming back.

Iltalehti newspaper also reported Ailus had flown her friend to Lapland to accompany her on a work-related trip and charged Keva for his tickets.

Ailus had allegedly also charged her family’s moving costs on Keva twice.

Ailus maintained she was unaware she continued to be paid child benefit after she moved away from Norway.

Although she said she would give up the flat in exchange for an increase in her salary, she also pointed out that she understood that, to “low-earning municipality workers and pensioners, the fringe benefits of pension fund management might seem excessive”.

What is seen as the last straw in the evolution of the scandal is the meeting Ailus organised for her staff at Keva last Wednesday where she declared she had no intention of resigning, although Keva’s chairwoman, Laura Räty, announced that she no longer trusted Ailus.

IPE asked Ailus for a comment last week, but she did not return the call.

Chairwoman Räty told the media late Friday night that Ailus’s resignation was based on a lack of clarity in a range of issues.

“There were unclarities in receiving social security, applying and interpreting competition law and in making acquisitions,” she said.

“Issues like this have nothing to do with what kind of benefits are moderate and appropriate.”

The scandal is likely to pave the way for ending political appointments in Finland.

Ailus was appointed as managing director of the scheme in 2009 out of a group of 20 applicants.

Her appointment has been described as political, as Ailus is a member of the Centre Party and arguably had less experience with the pensions industry than several other applicants.

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