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Pealtnägija's unsanctioned portrait of Margus Linnamäe

Margus Linnamäe
Margus Linnamäe Source: "Pealtnägija"

Last week, Ekspress Group named Margus Linnamäe Estonia's most influential person, ahead even of the president and prime minister. The total turnover of all his companies is nearing a billion euros, with interests ranging from diapers to the media, not to mention political influence. Despite this, the tycoon has remained so mysterious that most of his employees would not recognize him on the street and goes to considerable lengths to make sure that remains the case. That is why Taavi Eilat presents an unsanctioned portrait of the man also described as Estonia's first oligarch in Pealtnägija on Wednesday.

Three years ago, the Setomaa ülemsootska (the deputy of the mythical Seto King Peko on Earth – ed.) posted a set of rather unremarkable pictures on Facebook. On them, a man in a modest sweater and a pair of jeans stands next to the others. These are among the last public pictures of Margus Linnamäe who many believe is the most influential person in Estonia.

Linnamäe (55) has built a business empire in the past 25 years the turnover of which is fast approaching a billion euros and that reaches virtually every Estonian.

"Competitors have said with irony that Linnamäe buys everything that moves," said Aivar Hundimägi, deputy editor-in-chief of business daily Äripäev.

In sharp contrast to the scope of his business and charity work, Linnamäe goes to a lot of trouble not to stand out. He has only given two televised interviews over the years – both to the author of this article. The recent one took place in 2015 when Linnamäe had just become the sole owner of Estonian daily Postimees. Linnamäe visited the premises of Tartu Postimees that he owns for the first time with the ETV film crew.

When the editorial of Postimees suffered several upheavals over the following years and Linnamäe was seen guiding politicians' pharmacy reform decisions, Pealtnägija repeatedly asked for an interview but was not successful. When Pealtnägija decided to put together a feature without the participation of its star, Linnamäe forbid his employees to talk about him. Many business partners, schoolmates and friends even refused to praise Linnamäe, which is telling in itself.

A nationalist from Setomaa

Margus Linnamäe was born in Setomaa to mother Olga, a school worker, and father Paul, who worked as a driver. Linnamäe's older brother Aivar was two at the time. The Linnamäe family moved to Tartu after Margus had attended the local Meremäe School for a few years, partly so that Margus could attend the sciences class at what is today the Tartu Tamme School. It is said that students there, including Margus Linnamäe, stood out in terms of their strong pro-Estonian sentiment already in the early 1980s.

Teachers recall how the whole school was put on edge when a group of students, again including Margus Linnamäe, visited the grave of freedom fighter Julius Kuperjanov toward the beginning of the final decade of the Soviet Union.

"They didn't do anything except walking around there, but they could have been seen by KGB operatives. And then the school would have been in trouble," teacher Kaupo Järviste recalled.

After graduating from high school, Linnamäe went to study Estonian philology at the University of Tartu. Tiit Pruuli, who attended the university at the same time, remembered Linnamäe disseminated underground dissident material.

"The other thing that was immediately clear was that Margus is a great patriot, ironclad! That made him a nationalist as far as Soviet propaganda was concerned, and I remember saying to a group of people I was introducing Margus to that if I'm a nationalist, Margus is a double nationalist. /.../ He is an Estonian nationalist and a Seto nationalist. He was a very principled guy, and I believe he still is, meaning that he clenched his jaw and did what he thought was right," Pruuli said.

His peers recall how Linnamäe left philology after six months because he couldn't stomach the mandatory Marxism and Leninism classes. His attempt to continue in the history department was also short-lived as Linnamäe felt the pull of his true calling – business.

"He started moving canned food and shirts in the early 1990s and graduated to the pharmaceuticals business when attending university," Hundimägi said.

Margus Linnamäe entered the pharmaceuticals business with his brother Aivar, studying to become a doctor, and friend Georg Gavronski in 1992. Initials of the three men's first names read as MAG to which NUM was added to form pharmaceuticals importer Magnum.

"He imported drugs from Russia, which is likely how he made his first million. Mediation and Russia are the keywords there," Hundimägi said.

Wholesale trade was soon complemented by retail in the form of pharmacies that helped Magnum dominate the pharmaceuticals market. However, Linnamäe's business profile went beyond the pharmaceuticals business from the first. In addition to the Tallinn Pharmaceutical Plant, the Magnum trio privatized the Tartu Brewery and the Silmet chemical industry in the early 1990s. Both were later sold for a huge profit and using offshore companies to avoid taxes.

Articles written in hindsight claim the 140-million-kroon Tartu Brewery transaction did not see a single cent paid in taxes, and by the time the tax board got wind of it, the legal body behind the transactions was just an empty shell. Linnamäe does not admit having committed tax fraud but has said that business was done using typical methods of the times.

"It was a time when not everything was as well-set as it is today. Looking back today, we can say not everything was handled in the smartest way," Linnamäe said in 2013.

One of the most infamous episodes concerns the so-called Tallinn Pharmaceutical Plant scandal where Magnum told the Tallinn stock exchange in 1997 that it had launched a plant in Russia that caused the company's share price to skyrocket. The announcement turned out to be a lie after Äripäev journalists failed to find the plant in Moscow.

Nevertheless, it was the pharmaceutical business that lifted Linnamäe into a league of his own and earned him the nickname Mr. Apothecary. The recent report of Linnamäe's holding company UP Invest – that covered a period of 16 months – reported a turnover of €821 million, €550 million of which came from wholesale and retail trade of medicinal products.

Kadastik on Linnamäe: The generous hand you do not bite

UP Invest manages an incredible network of companies the business of which ranges from pet food to cafes, computers to news media, movie theaters and bookstores to a meat processing plant and a retirement home. The list goes on, and it is very likely everyone comes into a contact with a business owned by Margus Linnamäe every single day.

He is a very aggressive businessman, and people from other sectors I have talked to say that the way he eliminates competition is not exactly pleasant, that his behavior is rather brutal at times," said Mart Kadastik, former head of Postimees.

But the cutthroat businessman also has a different, a softer side – patron, art collector and a pillar of the community pledging hundreds of thousands every year. Linnamäe sponsors the Opinion Festival, Müürileht and the Avatud Eesti Raamat book series. His roots make him the biggest single sponsor of Seto cultural life.

"We are very glad he does the things he does and thinks like he does…," said Setomaa Mayor Raul Kudre, adding that all rural municipalities and regions dream of successful businessmen who would contribute to local life.

Linnamäe supports Seto literature, bought the rural municipality a building it needed in Pechory and regularly attends local kirmasks (village festivals), while the most shining example of his patronage is how the Setomaa Union of Seto local governments was turned into an organization with a regular paid staff following a proposal from Linnamäe in 2005. Linnamäe still pays for half of its operating costs, approximately €40,000 a year, with the local governments contributing the other half.

The businessman lives 80 kilometers from Setomaa in Neeruti, near Otepää where his residential complex is a mix of tradition and modern technology, complete with stables, riding ground, oxen, a gigantic greenhouse, tennis court and what is claimed to be the largest full scribe log home in Estonia nestled in between picturesque lakes.

"His is a generous hand you must never bite. He carries it with him, both of them, at all times, and you may never bite that generous hand. This kind of a one-sided relationship even exists regarding his generous charity work. He does not expect public gratitude and recognition, instead, he expects it to manifest as unconditioned loyalty," Kadastik described Linnamäe.

Even though Postimees only makes up a modest part of Linnamäe's empire, it is this role that has earned him comparisons with the oligarchs of neighboring countries lately. Long-time executive publisher of Postimees Mart Kadastik played a role in making it so. When Norwegian media group Schibsted pulled out of the Estonian market in 2013, Kadastik started looking for a core investor who would help him buy the company that owned Postimees, Kanal 2 and a classifieds business.

"That is when he thought it could be him. When I saw that Margus Linnamäe was seriously interested, and he is a serious man with a serious wallet, many arguments that are turning against the deal today seemed very attractive at the time. The fact that he maintained a low profile, didn't intervene or want to be in the spotlight. And how it would help ensure the press remained impartial," Kadastik recalled.

He admits in hindsight that he did not pick up on Linnamäe's aggressive business sense and only saw it at Postimees Group. If at first, Mr. Apothecary owned half of Estonia's largest media house, with the other half owned by Kadastik and small shareholders, the latter caved to pressure and sold it all to Linnamäe in 2015.

"When we saw the extent of that thirst for power and will to be the sole decision-maker where others were but an inconvenience, it was the end of the partnership. It was clear that it would have been an endless series of conflicts with small shareholders," Kadastik said.

"I believe Postimees and all other publications' journalists are professional enough to understand what they can and cannot do. As owner, I will definitely not interfere, I will not criticize a single article or topic that has to do with pharmaceuticals or my other businesses," Linnamäe said in 2015.

That Linnamäe is stubborn and prone to holding grudges is something Kadastik experienced for himself. When he wanted to publish an autobiography in 2016, Linnamäe threatened to sue him over publishing alleged business secrets. Kadastik sued Linnamäe's Eesti Meedia for discontinuing payments from his pension fund in breach of contract. While the sides eventually reached an agreement, Kadastik, after working for the paper for over 40 years, didn't even get an invitation to Postimees' 160th anniversary celebration.

The now retired Kadastik is not the only one who perceives hidden business interests and ideological convictions behind the facade of impartial journalism. Linnamäe has been a member of the Isamaa party ever since the days of the Estonian National Independence Party and donated hundreds of thousands of euros, while his business partner, UP Invest minority shareholder Ivar Vendelin, unexpectedly donated €100,000 to the ruling Centre Party this fall, causing centrist politicians to start talking about the need to rework Estonia's pharmacy reform in a way that would clearly benefit Linnamäe.

Dozens of people, including more than a few well-known and talkative persons refused to talk about Linnamäe. It may only be a coincidence, but when Pealtnägija asked Linnamäe whether they could interview CEO of UP Invest Sven Nuutmann, his reply was a simple "No, you can't" followed by a smiley face.


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Editor: Marcus Turovski

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