Global Strategy - blog

The Finnish government decided on October 21 that state-owned equities in eight non-strategic listed companies to be transferred to the entirely state-owned company Solidium Oy. The rationale for this decision is that Solidium could manage the holdings in a way that ensures the highest possible yield for the State. The decision was claimed to be “a natural continuation to the State’s active ownership policy, adopted by several previous Finnish governments. The global financial crisis that has been expanding rapidly makes it even more urgent for the State to come up with a tool that can be effectively used in ensuring a Finnish ownership in Finnish key companies” (Government Communications Unit, press release 322/2008).

By seeing the words ‘Solidium’ and ‘financial crisis’ in the same context one cannot avoid a vivid flashback from the beginning of the 1990s. Then, after the financial boom and the subsequent stock market crash, the Bank of Finland took over the SKOP bank and Tampella, an industrial conglomerate owned by SKOP, in September 1991. Both of these firms were in the condition of de facto bankrupt. Thus, the State of Finland became the owner of a listed commercial bank and a listed industrial corporation. In order to manage these new assets the Bank of Finland founded three holding companies Scopulus, Solidium and Sponda.

The aim of Solidium was to take care of the risks and management of Tampella. Basically, this meant that the huge debts of Tampella were “forgiven” by the Bank of Finland and, finally, Tampella was sold in pieces. In other words, in the beginning of the 1990s Solidium was the State’s tool for the liquidation of a failed industrial conglomerate. Indeed, this was a very different aim than Solidium has now—though we are again in the midst of financial crisis.

See further analysis of the organizational decline and failure of Tampella in my article “The Nature of Organizational Mechanisms” forthcoming in Organization Studies (2008/11).