Suspicious contract at UT – don’t worry, it was frozen

Photo: Artur Kuus

Companies belonging to employees with ties to a University of Tartu laboratory have seen nearly half a million euros from the university.

“It seemed like foul play back then, and we understood as much,” professor Alvo Aabloo from the University of Tartu admits. “To your delight or peace of mind, I can honestly say we never made a dime there,” he adds.

Head of the University of Tartu Intelligent Materials and Systems Lab (IMS) Aabloo is a prolific material sciences guru who attracts funding like flypaper attracts flies – €13 million over ten years. He is the author of more than 250 publications. A renowned scientist and recipient of a presidential honor. The following does not call into question his world-class academic achievements.

Aabloo is also a businessman, stakeholder (40 percent) and CEO of Estrotech OÜ. Another 40 percent of the company belongs to robotics activist Heilo Altin who also has ties to the university lab.

Public information suggests Estrotech is a small school robots’ business. However, its turnover nears an impressive half a million euros a year.

It turns out that IMS is a client of its director’s private business.

Mysterious and valuable tender

In 2016, the University of Tartu held a tender for framework contracts in the estimated volume of €550,000. Public information is scarce to say the least as it fails to list the recipient institute or offer any information as to way the tender was needed. The only explanation reads: “Procurement of mechatronics components and 3D printing service.”

Surprisingly enough, the university’s procurements department couldn’t initially tell us where and why the components were headed. It took the university’s press department almost an entire week to ponder the simple question.

The aim of the tender was to procure equipment for the university’s technology institute, including the IMS laboratory; for example, for a robot mannequin project coordinated by Aabloo. The tender went the way of two companies: Estrotech that is owned by Aabloo and Inchworm Machines OÜ (formerly Kockenarwe). It was a framework tender where contracts are signed with several companies and orders placed by way of competition with any of them based on necessity.

But the competition was smoke and mirrors.

Inchworm Machines is partly owned and run by Priit Kull who matches his wife’s stake in the company. At the time the tender was proclaimed, Kull and Aabloo worked in the same lab. They are friends and long-time business partners who worked, for example, on the Mars house research project. Aabloo and Kull have known each other for years and often pose publicly on photographs together.

“When they need something, they place an order,” Kull tells Postimees regarding how the tender works. “We have maintained the framework agreement more for future opportunities, not to make money,” he claims.

Kull explains that he had no contact with the university after 2015, meaning there is no conflict of interest.

However, the university’s video archives (UTTV) reveal a 2017 video from a speech by Kull where he introduces himself as a member of the engineering team at IMS and talks about the laboratory’s pursuits, including the robot mannequin project, in first person. Postimees reminds Kull of this fact.

“Yes, I was there as a freelancer,” he recalls how we worked at the lab but took a salary from his company at the time. This means that Kull was an employee of the lab de facto but not de jure.

Aabloo now claims that the procurement contract is frozen as the company picked up on the risk of corruption. “The university has been notified, and we know we cannot do it,” he said.

How to get the same €550,000 service without a tender? Aabloo claims the components were ordered directly from suppliers abroad. The initial tender was held to streamline processes, but it was possible to do without.

The university’s press service replies that Aabloo’s company has made €14,500 (VAT not included) on the contract, while Kull’s company has made €65,000.

The public procurements register produces another mechatronics components tender from 2014 that landed the same companies €40,000 worth of contracts. Estrotech sold the UT Institute of Technology €28,000 worth of accessories for its idea lab in 2013.

Today, Kull no longer works for IMS even as a freelancer.

He signed another procurement contract worth €31,000 with the university for a robot platform in 2018.

The contract should have been terminated and a new tender held

The University of Tartu is obligated to organize tenders like any other public institution, agency of ministry. The public procurements act stipulates that winners cannot be involved in drawing up tenders.

Whether the university really has full knowledge, as claimed by Aabloo, is difficult to say. The real conflict of interest was discovered following the journalist’s questions.

Documentation suggests the tender was drawn up by IMS lab employee Tauri Tätte. “Assessing the framework tender in hindsight, we came across a potential conflict of interest as Tätte answered directly to Aabloo,” the university’s procurement department says.

It is impossible Aabloo had no connection to the tender’s details. The robot mannequin project for which components were procured was his to coordinate. The university confirms that the tender’s technical description came from Aabloo’s laboratory.

Tätte’s connection to Kull is equally obvious. They previously worked together on the Mars house project in the same building. Tätte was an engineer and Kull his superior. Everyone involved were either directly or indirectly connected to the tender.

“Terminating the contract is naturally the right thing to do if you perceive risk of corruption,” said Evelin Karindi-Kask from the finance ministry’s public procurements and state aid department. “The University of Tartu has procurement rules, and conflicts of interest should be ruled out. If conflicts have arisen, the contract should be terminated and a new tender held.”

Even though Aabloo claims the tender was unnecessary in the end as the service was procured directly from providers, Karindi-Kask explains that is not in line with the procurements act. If goods are ordered outside of a tender already signed, another tender should be held the volume of which cannot exceed 20 percent of the value of the initial contract. Saying the goods were ordered from abroad is not a valid argument because foreigners are free to participate in tenders.

Knowing oneself beneficial once more

A situation where a public law organization has signed a contract it is not sure is entirely regular could spell corruption risks, damage to reputation and place on the sides obligations that cannot be met,” said Carina Paju, executive manager of Transparency International Estonia. “While the sides are not legally obligated to terminate the contract, it is necessary from an ethical and moral standpoint.”

Spokesperson for the University of Tartu Kristina Kurm said following Postimees’ inquiries that the tender contract with Aabloo will be terminated “in the interests of clarity.” The contract with Kull’s company will stand.

“He was not associated with the tendered during preparations for and time of the tender in question,” the spokesperson explains, suggesting Kull was not employed by the university at the time.

In 2015-2018, Aabloo and the University of Tartu coordinated a European project called MICACT funded by Horizon 2020. One of the requirements of the project was that the private sector would have to be involved.

The chosen partner – surprise-surprise – was Aabloo’s company.

Even though Horizon 2020 rules do not allow transactions with companies with whom there might be a conflict of interest, coordinators are surprisingly free in their choice of partners.

Knowing oneself paid off: the project application brought Estrotech €250,000, whereas it is difficult to say where the university ends and Aabloo’s company begins.

Working on the MICACT project for Estrotech was University of Tartu doctoral student and then IMS lab employee Sunjai Nakshatharan. Estrotech does not have its own production unit. Nakshatharan used the laboratory’s equipment and his desk was at the university, while he was paid from Aabloo’s company. The doctoral student could offer Postimees no adequate explanation of why things were the way they were.

Why was it necessary to involve Aabloo’s company in a situation where the project was carried out using the university’s people and tools?

“Because one of the requirements for the formation of a consortium was that every public sector research institution had to have a private partner, we had no option other than Estrotech OÜ at the time the project was launched,” Aabloo explains.

“The activities of the company were more applied than those of universities and aimed at development of specific prototypes or products,” he explains the difference between the university and his company.

Another aspect that catches the eye about the tender described toward the beginning of the article is that the university lab procured 3D printing services from Aabloo’s company in a situation where the IMS lab has its own 3D printer. Would Estrotech have offered the lab services using the latter’s own printer?

Aabloo claims the lab did not have the printer when the contract was signed.

Aabloo is also involved in an ongoing European-funded project called Ecolabnet both as a representative of the university and as a businessman, with his company looking to make another €58,000.