Suspicion: Crisis support ended up in the wrong hands

Headquarter of Rural Development Foundation (MES) in Viljandi. Photo: Marko Saarm

Criminal suspicions were brought against members of the board of the Rural Development Foundation (MES) Raul Rosenberg and Madis Reinup on Wednesday. Both were in charge of allocating crisis support at the height of the coronavirus crisis.

According to suspicions, MES approved over €24 million worth of loans to at least 42 companies that did not meet instrument criteria. Chairman of the board Rosenberg and member Reinup are suspected of failing to observe the state’s financial interests or abuse of trust.

MES started offering support for mitigating the effects of the COVID-19 crisis after the passing of the 2020 supplementary state budget. The aim of the measures was to use financial support to alleviate negative effects of the crisis for bio and rural economy companies. Current information suggests that up to a quarter of the €100 million allocated for crisis loans reached companies that did not meet criteria for recipients.

The Prosecutor’s Office said that there are currently no grounds for suspecting any company of criminal misconduct. Collection of evidence will continue, with both the scope of the investigation and suspects subject to change.

Kairi Kaldoja, chief prosecutor for the Southern District Prosecutor’s Office, said that purposeful use of crisis alleviation measures is crucial. “In a situation where the state has to solve the coronavirus crisis, while keeping finances in check, use of resources needs to be particular,” she remarked.

Evidence suggests requirements were knowingly ignored, the prosecutor emphasized. “This does not point to a minor human error but a crime. In a situation where the state has demonstrated preparedness and intent to support those who need it most, this level of disregard when allocating support is unfortunate,” Kaldoja said.

The prosecutor added that if there are elements of criminal offense, her office is obligated to check in criminal procedure whether the heads of MES did everything in their power to only support companies that qualified.

Ats Kübarsepp, head of the Central Criminal Police’s corruption crimes bureau, said that it is of crucial importance that state finances are used responsibly and purposefully, which is why the police paid extra attention to lawful use of coronavirus crisis measures. “In the case of MES loans, we discovered that money has been paid out to companies that did not meet the requirements. This included enterprises created immediately before the coronavirus crisis and those whose area of activity did not meet the criteria. Companies that had managed to boost turnover during the crisis period were also supported,” he described.

“Allocating sums to companies that do not meet criteria is unfair toward those most affected by the coronavirus crisis and for whom the money was meant but never reached. There are plenty of things proceedings will still need to determine – direct background and causes,” Kübarsepp said.

Chairman of the MES supervisory board Andres Oopkaup was not up to speed on the detention of board members and suspicions brought against them on Wednesday evening and learned about it from local paper Sakala journalist. Told that the suspicions concern COVID-19 crisis support measures, Oopkaup said that he only knows as much about it as was covered in the National Audit Office’s recent report, adding that there is a point of contention involved. “Whether the company met requirements in its application or in reality. It is an important distinction,” Oopkaup told Sakala. “The Administrative Procedure Act states that if the entrepreneurs makes a mistake filling out the application, the actual situation needs to be considered. However, I would offer no further comment,” he said.

The prosecution has asked the court to remove the suspects from office. Minister of Rural Affairs Urmas Kruuse (Reform) made a proposal to the MES supervisory board to suspend the suspects’ mandate and convene an extraordinary meeting. “The Ministry of Rural Affairs has no more information than the criminal police have released,” the minister said, adding he is convinced the authorities will work effectively and get to the bottom of this matter. “The ministry and the Rural Development Foundation will fully cooperate with law enforcement,” Kruuse added.

The Southern District Prosecutor’s Office had not yet decided whether to move for the arrest of Rosenberg and Reinup on Wednesday evening. “They have been detained as suspects, with proceedings underway. Whether their arrest will be sought will be decided inside 48 hours of their detention,” spokesperson Kauri Sinkevicius said.