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'Silvergate': The Reform Party's 2012 financing scandal

The scandal surrounding potentially illegal donations to the Reform Party that broke in 2012, known as "Silvergate," ended when the prosecutor gave up her investigation due to lack of evidence. Kristen Michal, then one of the main suspects in the case, is one of the Reform Party's two candidates for chairman.

Former MP and then member of the Reform Party, Silver Meikar, admitted to funneling money into the party's coffers illegally. Meikar stated that he had received cash from senior party member and MP Kalev Lillo, and had given the same amount to the party as a personal donation.

Allegation: Party members received cash, then gave it to Reform as personal donations

Meikar claimed that dozens of party members had done the same, receiving cash from senior party officials, among them former minister of culture Laine Randjärv.

None of these people had profited personally, but simply handed on the money they had received. That way, cash of unspecified origin was laundered and received by the party as legal private donations.

Current candidate for the party's leadership and former minister, Kristen Michal, had approached him in the matter, and had played a role in asking party members to make these donations.

At the time, Michal said that Meikar's claims that the money he had donated had not come out of his personal means were "surprising and unfortunate." Michal and Lillo rejected the accusations, with Lillo saying that he had not given any money to Silver Meikar, and Michal, then Estonia's justice minister, calling for a full investigation of the matter.

Reform's upper echelons deny involvement

Then-chairman of the Reform Party and prime minister, Andrus Ansip denied any knowledge of money being funneled into the party this way. Ansip condemned the accepting of illegal contributions, and said that the people involved should be held responsible. About demands that justice minister Kristen Michal should resign, Ansip said that such a step would be tantamount to admitting guilt, and that it was out of the question.

The Office of the Prosecutor General announced an investigation on suspicions of the Reform Party having received funds from illegal sources.

Also in May 2012, then Tartu city councillor Kristjan Karis came forward and said that he too had been approached. "They asked me if I could put the money in my bank account and then donate it to the party," Karis told at the time. He said the donation had amounted to around €330.

"I received money from the regional [party] director," Karis said. At that time, Karis was in charge of the party's regional development in Tartu. The regional director was Laine Randjärv, a former minister of culture. Karis's direct superior at the time was Kalev Lillo.

In late May 2012 the Central Criminal Police searched the Reform Party's headquarters and confiscated several computers. According to the prosecutor's office, the circle of people that had funneled money into the party's coffers had widened.

Circle of suspects widens

Ansip again rejected the accusations categorically, this time saying that Silver Meikar had lied, and said that party leaders and high-ranking officials couldn't be sure anymore that their phones were wire-tapped, which in turn prompted the Internal Security Service to issue a statement that eavesdropping was not a standard practice in its investigations.

Calls for the resignation of Michal intensified again towards the end of May. Then-finance minister Jürgen Ligi took the offensive, calling Meikar's accusations a "crime against the state", and saying that he was "not irreplaceable". Beyond his role in the party, Reform had taken care of Meikar by getting him his very well-paid position at the Institute of Human Rights, Ligi said.

Kristen Michal eventually became one of the investigator's suspects in the case, and was called in for questioning — to which, much to the surprise of journalists present, MP Taavi Rõivas also appeared. The prosecutor's office did not comment on why Rõivas, who went on to become prime minister two years later, was present as well.

During all of summer 2012, the circle of suspects in the case continued to widen, including among others also MP and later chairman of the Riigikogu's European Union Affairs Committee, Kalle Palling.

Prosecutor: Party loyalty makes investigation near impossible

The investigation came to an end in autumn 2012, when prosecutor Heili Sepp announced that at the end of the day, everything that they had been able to ascertain was based merely on hearsay, and that they were closing the file due to lack of evidence.

ERR News reported at the time that of the 60 witnesses called in by prosecutors in the now-dismissed criminal case into the Reform Party's funding contributions, nearly all provided what prosecutors described as "specious" explanations about the origin of the money.

Loans from mother-in-laws, unexpected windfalls, home safes, proceeds from precious metals investments - all of these factored in the explanations, many of them more than once, according to prosecutors.

In the end, Sepp speculated in her decision to end the proceedings, members' loyalty to the Reform Party may have outweighed the spirit in which Meikar originally exposed the culture of funneling cash donations from unnamed businessmen through party members.

"Confessing to the scheme described by Silver Meikar, and the description of similar experiences at questioning would clearly have been harmful to the Reform Party, as if just one such case had been proven part of this criminal case, it would have meant that the Reform Party was criminally liable, a situation that the party would understandably wish to avoid," Sepp stated in her decision of Oct. 15, 2012.

One witness was quoted in the prosecutor's file as saying, "The party takes care of its own. The party really has a problem right now in that it selects people based on loyalty, not what their abilities are."

"The problem is not the financing, but the fact that people are forced out of loyalty to decide according to what is best for the party," the unnamed witness continued.

Sepp wrote that the family-like ties were also shown by the fact that many witnesses had used the same lawyer, who would stay in the room while witnesses changed.

The prosecution's report also mentioned the media offensive mounted by the Reform Party to discredit Meikar, and to describe the contribution scheme as normal. Sepp argued that this had had a clear psychological influence on party members.

"Considering the psychological influences, motives and background, we must believe that if personal sources of testimony that would substantiate the statements of Meikar did in fact exist, the likelihood that they would actually give the testimony would be negligible, due to the conflicting interests that they would have had as members of the party," Sepp wrote.

Meikar was thrown out of the Reform Party the same month. Then-secretary general of the party, Martin Kukk, commented the decision. "Freedom of speech is a great value and everyone in the Reform Party has the right to have their own opinion. The liberals also know that every person is responsible for his words. Indiscriminate and careless blows are not acceptable or in accordance with the liberal worldview."

Meikar said he stood by his words, and insisted on the accusations he made being true.

December 2012: Michal resigns as Minister of Justice

Minister of Justice Kristen Michal resigned in December 2012 after a survey brought out that 90% of the people in Estonia didn't trust his statements in the case.

Meikar spoke at a party assembly later on in 2012, warning it that changes to its internal politics needed to be necessary, and also saying that the rift between society and politicians would only deepen if it continued on the same way.

Ansip said at the same event that though there were problems, they were connected to individuals. Where he accepted that some party members might have been responsible for "false impressions", he attacked the media, saying that its "generalizations" in the case had gone too far.

In the course of the year, Aivar Hundimägi, deputy editor-in-chief of business paper Äripäev, said on ERR's Vikerraadio that the Reform Party had been "a cat that lands on its feet". Typically, as in one case in 2007, when the American owner of Estonian Railways said that the party had pressured the company's board members for contributions, the accuser was left isolated, and the charges failed to stick.

Another case had taken place in 2009, when Äripäev reported that three Reform Party politicians, operating independently, had allowed businessmen to pick up the tab for campaign expenses. This was in principle illegal, as direct corporate contributions had been outlawed by then.

Hundimägi said that in those cases there was an effort to discredit the accuser, and that this was what had been done with Silver Meikar as well.

Kristen Michal's name had also come up in those two cases, Hundimägi said. Michal has the support of the party's two previous prime ministers, Andrus Ansip and Taavi Rõivas.

Editor: Aili Vahtla

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