Even though businessman Urmas Sõõrumaa has repeatedly denied involvement with successful public procurement participant Signaal, an investigation by Postimees suggests his ties to the company are longstanding and quite direct.
Ever since its privatization 15 years ago, road and traffic signs and systems provider AS Signaal has remained one of the more mysterious companies in Estonia. Its true owner has at different times hid behind lawyers, in Switzerland and Cyprus. The company last changed hands six months ago and went to Dutch lawyer Thomas Karsten Beute. The change was made one month before entry into force of legislation obligating companies to reveal true beneficiaries.
Signaal has been very successful at public procurements, winning at least 22 tenders worth millions in the past six years alone. The company has been especially successful in the capital Tallinn. So successful that for a time competitors believed it pointless to enter any tender they knew Signaal would be interested in.
“How can you ask such foolish questions?” Sõõrumaa said two years ago when Vilja Kiisler asked about his rumored ties to Signaal in an interview Sõõrumaa gave to business daily Äripäev. Journalists from several publications had associated Sõõrumaa with Signaal before, while the evidence had always been merely circumstantial.
Sõõrumaa told Postimees that he is not the true owner of Signaal, has never been and has no other ties to the company. The only connection he could think of was when Signaal lined a school stadium his company manages.
However, the land register suggests that seven years ago, Sõõrumaa took out a mortgage on four luxury apartments he owns in Tallinn’s Old Town, two seaside properties in Kloogaranna and a 10,000-square-meter plot belonging to Signaal on Liimi street.
How is it possible the businessman cannot recall that particular visit to the notary but knows about lines on a school stadium?
“It comes as a surprise to me. It was so long ago that it’s out of my head,” Sõõrumaa says.
The year 2011 was a difficult one for both Signaal and Urmas Sõõrumaa. The former found itself in the middle of a corruption scandal. The internal security service found out that CEO Ats Tamm had been paying off two key officials of the Tallinn Transport Board: the board’s director Mati Songisepp was paid a little over €122,000, with Vello Lõugas treated to a BMW racecar worth a little under €10,000.
Sõõrumaa had been hit hard by the economic crisis. “The situation in 2011 was that more than one bank was considering seeking litigation. It was a time of going from person to person begging them to guarantee your loans,” the businessman recalls.
A day before Christmas in 2011, Sõõrumaa, his right-hand man Tarmo Keskküla and representatives of LHV Bank walked into a notary’s office on Rävala street. A mortgage of €2 million was established on seven properties in favor of LHV. One of the apartments in question was a 183-square-meter luxury abode inhabited by Sõõrumaa himself, while members of his family lived in the remaining apartments.
“When I go to a notary, I’m handed the last page to sign. I never read anything that long personally,” Sõõrumaa says concerning the ten-page mortgage contract.
An expert told Postimees that loans were granted under draconian terms at the time. The real estate market was showing the very first signs of recovering from the crisis. Moreover, LHV was not able to compete with offers from larger banks at the time. It – loan refinancing – had to be among the main reasons why the mortgage was given to Tallinn Business Bank a mere year later.
Why should a company that Sõõrumaa maintains has never had any ties to him pledge its property valued at €740,500 at the time in his favor?
“The way I see it, your company needed a loan during a difficult period. To get the loan from LHV, you had to pledge all of your assets…” I offer. “… and ask for more from my friends,” Sõõrumaa finishes.
“What I was aiming at is that perhaps you are the owner of Signaal and the plot in question.”
“No, I am not,” Sõõrumaa says.
The businessman then offers that the loan could have been for a planned real estate development with Signaal that didn’t happen in the end. An office and warehouse building belonging to Sõõrumaa was recently finished on Liimi street. But the loan was not for real estate. The contract states it went to USS Security.
Sõõrumaa returned to the security business in 2011. It was difficult at first as every single client was fought over. Survival was by no means guaranteed. That is very likely why Sõõrumaa needed to borrow €2.8 million. In addition to real estate, USS Security’s shares and a commercial pledge on movable property was used to secure the loan.
The company’s annual report still reads in 2013 that the firm’s short-term obligations outweigh its assets. “Plans include repaying loans and other obligations reflected as short-term obligations using this year’s cash flow. The owners are willing to extend loan obligation deadlines and provide additional financing of business activity if necessary.”
The mortgage still lies on Sõõrumaa’s apartments, the seaside properties and the Signaal plot. USS Security’s latest annual report suggests the instrument will be due in two years’ time. Having looked into things, Sõõrumaa sends over two invoices Signaal has issued USS Security. They suggest the security firm is paying €11,666 a year for the guarantee. “An ordinary business transaction. Friends helped me out of a tight spot,” he says.
Friends willing to pledge a €750,000 plot and a successful public procurements company for an annual sum of €11,666 must be good indeed.
Sõõrumaa only admits that he is interested in acquiring Signaal. “I take an interest in all service companies that are for sale,” he says and adds he learned about the company being for sale approximately one year ago.