Newspaper: Center’s €450,000 guarantee could cost Savisaar party chairmanship
The letter of guarantee over €450,000 signed by former Center Party secretary general Priit Toobal could in the worst case lead to the seizure of party assets and to Edgar Savisaar losing the chairmanship of the party, Postimees wrote on Friday.
Postimees wrote that members of the Center Party’s leadership had known about the letter of guarantee signed by Toobal the media learned about on Thursday for a month already. The guarantee issued to the company Midfield Plc, owned by Center’s long-time campaign mastermind Paavo Pettai, guarantees that if the company should find itself in financial difficulty, the party would help out.
The party’s leadership is expected to meet for an emergency meeting on Monday. They will most likely order a legal analysis of the letter. Some members are convinced that the guarantee isn’t legally binding, as Toobal didn’t have the authority to sign it in the first place.
Legally, the Center Party is a not-for-profit organization. The law states that though each member of the management board of a not-for-profit as well as the secretary general of a such an organization are entitled to sign agreements individually. But there is a restriction: The amount of money in question can't exceed 25% of the yearly income of the organization. The amount indicated in the letter of guarantee bearing Toobal's signature is closer to one-third of the annual income of the party.
Postimees learned that the paper has allegedly been the subject of discussions with party chairman Edgar Savisaar on several occasions. Rumor has it that Toobal was following Savisaar’s instructions when he signed the guarantee.
Postimees also wrote that there were rumors that Savisaar’s defense in the ongoing graft trial against him showed the paper to the party’s current secretary general, Oudekki Loone, a month ago.
The Center Party is known to have been regularly repaying its debt to Midfield. According to Postimees this begs the question that if a similar amount of the debt has been repaid, are we speaking of a new debt here?
What is known is that the Center Party has made regular payments to Midfield Plc to pay off its debt with the company. According to Postimees, the question now is whether or not the guarantee represents a new debt not previously mentioned before.
Should Midfield file for bankruptcy, the paper would certainly end up in the hands of creditors who would then start claiming money from the Center Party. Even if Center succeeded getting the paper declared void, this didn’t mean that the party couldn't face litigation, Postimees wrote.
The Center Party's financial manager, Kalev Kallo, said he knew nothing about the paper.
“I really don't know. It isn’t clear now, and I don't know how this paper has been come into existence. If there is a meeting at the beginning of the new week and the matter gets discussed, I will hear explanations for the first time, just like everyone else,” Kallo said.
“I don't believe that the matter is that serious, there’s certainly a lot of hot air in this. It cannot be that one person can issue a guarantee like this on the leadership’s behalf. This is legally null and void, or something similar,” he added.