Incoming Nokia chief fined for minor tax fraud

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Olli-Pekka Kallasvuo, set to take over as Nokia’s chief executive this summer, has been fined about €31,000 for “a minor tax fraud” in Finland after failing to declare €11,000 worth of imported goods on arrival in Helsinki from Switzerland.

Mr Kallasvuo was caught on September 25, 2004 after he claimed a value-added tax refund of about €650 on the goods in Zurich before boarding a Helsinki-bound flight. Based on information in the refund application, Swiss customs authorities tipped off their Finnish counterparts about Mr Kallasvuo’s purchases, which included items of clothing, shoes, a suitcase, a watch and some antiques.

After the Nokia executive had left the Helsinki-Vantaa airport via the green channel for passengers without goods to be declared, authorities launched an investigation and found him in possession of the reported items, said Mika Pitkäniemi, chief customs inspector at the airport. According to European Union customs regulations, a passenger arriving from countries outside the EU is allowed to bring in a maximum of €175 of purchases undeclared. Mr Pitkäniemi said Mr Kallasvuo had told customs officials investigating the case the limit had not occurred to him at the time although he had sought the VAT refund on departing non-EU Switzerland.

Mr Pitkäniemi said officials at the Helsinki-Vantaa airport caught “a few dozen” passengers a year for this type of offence, adding the value of the goods Mr Kallasvuo failed to declare was high by local standards.

The Nokia chief operating officer was yesterday unavailable for comment and Arja Suominen, head of communications at Nokia, would only say: “Mr Kallasvuo immediately told us about the incident. We were aware of it.” The case, which typically for such an offence was settled out of court, did not emerge until this weekend when Helsingin Sanomat, the Finnish daily paper, reported the fines.

In Finland, whose legal system ties fines to the offender’s income, a fairly minor offence can prompt hefty financial penalties. Speeding tickets running into tens of thousands of euros are not unheard of in cases involving high-earning businessmen. In 2004, when Mr Kallasvuo served as head of Nokia’s core Mobile Phones unit, he drew €584,000 in salary and earned another €454,150 in bonus.

A lawyer by training, Mr Kallasvuo has worked for the world’s largest mobile phone maker since 1982. He was last year appointed to succeed Jorma Ollila as chief executive from June 1 this year when the iconic business leader becomes chairman of Shell, the oil major.

Nokia is due to report its fourth-quarter results on Thursday. The Finnish industry leader has recently been clawing back market share although tough competition has kept margins under pressure.

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