Ministry pulls wool over EU eyes

Photo: shipspotting.com

«Total madness... Well I understand business you know, but, what’s the state up to, here?» wondered Riigikogu member Mikhail Stalnukhin (Centre Party).

«Words fail me. At times, one wonders: am I too dense to get the point; or is it just... way out there?» asked Inara Luigas (soc dems).

The scheme so surprising to Ms Luigas and Mr Stalnukhin was revealed to Riigikogu budget committee, by National Audit Office, on November 11^th:  how €11m of EU money was peculated to Estonian fishermen with the knowledge of Ministry of Agriculture.

Not only Mr Stalnukhin and Ms Luigas; all others in the committee quite gasped: what’s the deal? Can that be true?

What, then, was so shocking?

Fishing power down anyway

Once upon a time, the European Union decided that Europe needs to cut its fishing fleet, as fish was getting scarce. A story familiar for Estonia, the Baltic Sea having it the same way.

In order to alleviate situation of sacked fishers, the EU decided to pay them some support money to start a business, go study or what not. In 2007–2013, within this initiative, Estonia was allotted €11m; as of today, €6.2m has been distributed. 

What happened in reality? The first half of the task was faithfully adhered to. For instance: Vladimir Lavreshin, a fisher in Ida-Viru County, had two ships with total capacity of 331 kW. He scrapped the vessels and, via state, got €415,000 of support.

All OK: ships scrapped, deleted from register, fishing power cut – the goal achieved, the state was happy to report to Brussels. This, however, was just the beginning of the scheme.

For state i.e. EU money, Mr Lavreshin purchased two newer ships from Russia, costing €380,000 with capacity of 574 kW for the pair of them. That wasn’t the end. The next step by Mr Lavreshin: the man again applied to PRIA (Estonian Agricultural Registers and Information Board) for scrapping support, indeed getting €548,000 for which he scrapped one of the «Russian-born» vessels (220 kW).

Totalling up: the fisherman started off with 331 kW of fishing power. Thanks to the scrapping –> support –> buying new vessel –> new scrapping –> new support scheme, his capacity had risen to 354 kW i.e. a little more than before. The thing was: meanwhile, the state had spent €963,000.

This being just one example. A curiosity, as the money was «worked» twice. However, basically the same scheme was applied with dozens of fishing vessels in Estonia.

The meaning of the support – let’s cut fishing power and provide the med with other jobs – collapsed. National Audit Office says: the EU money to reduce fleet and scrap ships went for renewal of local fleet.

The scheme became possible as, starting 2004, Estonia has deleted 82 fishing boats from register without paying the benefits. By that amount, fishing power has been cut and the aim agreed with EU thus abundantly fulfilled. In reality, Estonia had achieved the aim – of cutting size of fishing fleet – without spending a cent.

In reality, there was no need at all to pay scrapping support, as fishing power was down anyway. But, as EU had allotted the funds, it was decided to take it anyway. Europe was informed that registered fishing power was going down; EU was not told that a select bunch of fishermen are coming back the next day, figuratively speaking, through another door at the Ministry, obtaining new fishing licences for new ships bought with EU scrap-support.

Evidently, agriculture ministry realised the thing smelled foul; thus, the option was never advertised. It went the quiet way: who knew, were lucky.

Neeme Suur (soc dems i.e. SDE), a state budget special audit committee member, summarised: «Had it been Estonian money, we would say it’s imprudent to make such use of it. But as it was EU money, then the ministry thought the scheme was nice. And should they do it twice or thrice, no problem: these are all our own guys.»

Golden words. Should Estonian state thus deal with local taxpayer money – just throwing it to businessmen, essentially for the enrichment of the latter – the public would demand that the minister step down and ask, if there weren’t any hidden «awards» involved.

By the way: laws have not been violated. So say all of them. The sole doubt hovers over fishing boat Viru. Here, also, it so happened that Viru was scrapped, but for the support no new vessel was purchased: rather, a new one was built. And, as otherwise EU had not specified what the support should be used for, it had mentioned that building new vessels is a no-no.

«All’s legal»

According to Maidu Lääne of Audit Office, he had asked the Viru ship guys if they had had a new ship built. No, we acquired it, the guys has answered.

Once in the factory, the truth came out. But smelling no danger, they opted to wink at it.

Tarmo Olgo, also of the Audit Office, adds that no-one expects anyone to be punished by EU. According to him, something is rotten in the state of European fishing financing, as also pointed out by Court of Auditors. 

Many big states have done the same – no one will be poking around. Better not poke around in Estonia, as this might unearth similar schemes in other member states...

Estonia’s agriculture ministry justifies itself by saying that they behold the system as a whole, within one big entity: overall, fishing power did come down, didn’t it? It did. The ministry says they deal not with single enterprises, where indeed there are dozens of cases of using the scrap-funds to acquire fresh vessels.

When asked by Riigikogu member Annely Akkermann (IRL), on Monday at the committee – «Will the scheme now come to its end or can the fun go on?» – Olavi Petron, vice chancellor at Ministry of Agriculture thus answered the lady: «The scheme, as you call it, will work as long we have power. All is legal.»