Service industry association chairman: Enterprise Estonia is concealed corruption (8)

Enterprise Estonia. (EAS homepage)
11/16/2016 5:01 PM
Source: BNS, ERR
Category: Business

Enterprise Estonia (EAS) will cease to exist when the money flow from the European Union’s structural funds stops, Jaan Pillesaar, chairman of the Estonian Service Industry Association, said on Wednesday.

“At some point [EAS] will go no matter what, when the European Union no longer supports us. It apparently makes sense to accept the money offered to us, but after that we should avoid any sort of collecting money through taxes, and then distributing it,” Pillesaar told BNS following the news that the supervisory board of Enterprise Estonia decided at an extraordinary meeting to recall CEO Hanno Tomberg.

“This is a process in the course of which half the money goes missing, and the rest spoils the market, since the business ideas that get support are not the best ones, but ideas selected by officials under various subjective circumstances that never coincide with what business people would choose,” Pillesaar said commenting on how EAS distributes the funds it receives.

“I can understand that this a tool for politicians to buy votes: you get a grant, now be so nice and support us too. It is actually concealed corruption. This kind of humbug isn’t actually necessary, all these officials should really go and take up a productive job,” Pillesaar said.

The Estonian Service Industry Association has made seven proposals to the parties currently holding talks to form the next government coalition. The recommendations include the partial privatization of health care, lower labor taxes for the exporting sector, listing the major state-owned companies, and abolishing state subsidies for businesses.

Pillesaar: Current situation not very different from that in USSR

The way state-owned companies were currently organized was highly ineffective, political, and showed elements similar to how they were run in Soviet Union times, Pillesaar said.

“If you just sell them, there might be the question whether the price was right, maybe it’s Russian capital or something of the kind. The easiest thing is to list them, because then the company will become transparent and will get a professional management team instead of a political one that doesn’t hand out lemons to its own people,” Pillesaar said referring to allegations that some politicians had asked to be bribed during the island ferry tender.

"I think it won’t be possible to sell everything, because some businesses are weak, and they should simply be wound up. The energy monopoly and the ferry monopoly could easily be listed companies, the state could be a financial investor in them if it so much wishes to be, but I don't think this is the role of the state,” Pillesaar said.

“The state has taken on an extensive range of duties over a long period of time under the pressure of different voter groups, and to please people, but all this is happening at the expense of public interest. The taxpayer pays for it, it’s very ineffective. The system is exactly the same as it was in the Soviet Union, where everything belonged to the state, and nothing functioned effectively. This part of the economy should be reduced radically, because the taxpayer is not rich enough to keep it up,” he said.

Recent criticism of Enterprise Estonia mainly revolved around a €190,000 grant given to OÜ Ermamaa, the company of former president Toomas Hendrik Ilves. Despite never putting the facilities built with the help of the grant to their intended use, Ermamaa was asked to pay back just 10%. Enterprise Estonia CEO Hanno Tomberg was recalled by the supervisory board on Nov. 16 after Minister of Entrepreneurship Liisa Oviir (SDE) had insisted that the failure of the management to assess the situation more carefully made a major change necessary.

Editor: Dario Cavegn

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