PERH continues working with corrupt cartel

PERH Photo: Raul Mee/Scanpix

A construction cartel that was paid millions by the North Estonia Regional Hospital (PERH) was only fined a few thousand euros for illegal practices and continues to perform contracts for the hospital.

Construction companies Tabasalu Meistrid, Estomar and Kose Ehitus and their heads Tiit Niibek, Peeter Pajumäe and Andrus Greim were fined between €1,300 and €18,000 for corruption and competition offenses tied to the hospital in 2018.

Over the past ten years, contracts with PERH have treated the companies to at least €6 million in turnover. The court’s decision confirmed that the contracts were secured with the help of bribes. The contractors also entered into cartel agreements.

Simply put, the companies secured a major construction contract between them and then decided who would handle what. Such conduct is criminal as the breakdown of work should be determined by tenders.

A new contract signed

Investigative organs admit that income from corrupt transactions does not currently qualify as criminal income, meaning the companies get to keep the money they made even after their conviction.

What is more: the same construction companies continue to pursue cooperation with PERH. The public procurements register reveals that all three have a valid contract with the hospital in the volume of €3.9 million from 2016.

Another procurement contract, similar in volume, was entered into by the companies and PERH in April of this year, meaning the trio will continue providing the hospital with services for the next five years. Charges against the companies had been made public by the time recent contracts were signed.

Head of the hospital’s infrastructure service Mairo Hirmo said that criminal proceedings are not grounds for removing companies from competitions. While a criminal conviction would constitute grounds, the companies had not been convicted by the time the recent tender was held. Tabasalu Meistrid and its director Tiit Niibek were convicted just nine days after the new contract was signed.

Head of the police’s corruption crime bureau Mati Ombler admitted that the police and prosecution are powerless to take away the income of companies that have offered bribes.

“The court finds these people guilty, they are punished, but the contract the bribes helped secure that is worth millions remains valid,” he said.

Income should be confiscated

Ombler explained that some countries confiscate up to 70 percent of profits made on contracts secured using illegal means. “That is the practice in Chile and Brazil for example – places where corruption is a major concern,” he said. “Estonia is currently not using every possible lever.”

Head of the justice ministry’s penal law and proceedings service Tanel Kalmet said that unfair income should be compensated. “We cannot say why benefits secured with the help of bribes have not been confiscated in some cases,” the ministry representative said.

The prosecution confirmed that it was impossible to confiscate income secured with the help of corrupt contracts, at least in this case.

“The law and judicial practice today make it impossible for the prosecution to move for the invalidation of contracts entered into in exchange for bribes or treat proceeds from such conduct as criminal income,” Kaarel Kallas, press representative of the public prosecutor’s office said.

Convicted companies have won various PERH tenders in more than 50 cases since 2010.

According to the charges, the companies received help from the hospital’s head of construction and later technical director Ivo Milli who stands accused of accepting bribes. Milli turned a blind eye to falsified documents and falsified papers himself in exchange for bribes. The prosecution claims the former technical director made over €100,000 this way.

Milli is the only participant in whose case a decision has not yet been made. Information available to Postimees suggests the prosecution has offered Milli a deal.

In addition to the aforementioned companies, engineering bureau Telora-E and its manager Alar Lepp were also convicted in this criminal case. Lepp was the only one to be handed a conditional prison sentence of two years. Estomar was only found guilty of competition offenses, but not offering bribes.

In addition to PERH, the companies have also colluded on other tenders: renovated kindergartens and schools for example.