In 2012, lawyers at Enterprise Estonia and the Ministry of Finance drew up a lawful recovery decision for support paid to Ermamaa OÜ in 2006, however the foundation's board made changes of their own favoring the business before finalizing it that March.
In 2006, Ermamaa OÜ developed a business plan to run the Ilves family farm, owned by Toomas Hendrik Ilves, as a tourism farm. At the time the nearly €200,000 in support from Enterprise Estonia, meant for its development as a tourism establishment, was granted, the company was owned by Ilves' then-wife Evelin Ilves.
After Ilves was elected President of Estonia later that same year, the original business plan proved to be impossible to implement and was thus put on hold. Following the couple's later divorce, Ilves took over as owner of the company.
At the end of his second term as president in October 2016, Ilves notified Enterprise Estonia that he had no intention of continuing with his ex-wife's business plan at the farm, after which he paid back 10 percent of the original €190,392.80 in support as requested by Enterprise Estonia per a 2012 decision made by the foundation's management.
According to daily Postimees (link in Estonian), however, the president was aware of the recovery decision at least a month and a half prior to the end of his second term of office, not just one week before it was made public, as he had claimed. "Shortly after the scandal broke in October 2016, Enterprise Estonia offered Ilves the opportunity to save his honor and pay back the unjustly obtained sum himself, however the president refused and paid lawyers to defend his interests," the newspaper reported.
February 2012: Draft for lawful decision drawn up
Following Ilves' reelection as president in 2011, Enterprise Estonia was faced with the legal issue that if Ermamaa were to postpone the implementation of its business plan for Ärma Farm a second time, structural funds law would not allow them to recover any of the funds in the future should Ermamaa decide to abandon its business plan as a tourism farm altogether.
According to Postimees, tasked with solving the situation were in large part the same individuals involved in the original 2006 grant approval: Enterprise Estonia director Ülari Alamets, board member Maria Alajõe, a division director as well as a number of lawyers.
After Enterprise Estonia had calculated the size of the potential future recovery from Ermamaa to be €68,224, sent then-Minister of Economic Affairs and Communications Juhan Parts a letter on Jan. 24, 2012, in which she asked whether he considered it possible to cover the recovery of support granted to Ermamaa OÜ from the balance of the ministry's domestic Phare program funds. The letter did not mention the intention to later recover the money in turn from Ermamaa.
"This left me with the impression of some kind of crime attempt; it would have looked like I am deciding to gift Ilves a farm," Parts recalled. He left the letter unanswered at the time, ordering it be retracted.
Alajõe has now claimed that she did not know whose idea the letter was, and based on her colleagues she had understood that the content of the letter had been agreed upon together with the ministry, whose support had already been secured. Claims regarding knowledge of this by then-employees of the ministry are conflicting, however a draft of a reply to Alajõe's letter, the author of whom is supposedly unknown, remains at the ministry supporting the use of Phare funds to pay back the Commission.
As the initial plan folded, Enterprise Estonia moved forward quickly, and documentation exists that in early February 2012, Alajõe, the involved division director and lawyers discussed the Ermamaa matter with the Ministries of Economic Affairs and Finance, both of whom recommended drawing up a conditional right of recourse on a temporal basis for future use with Ermamaa.
In mid-February, Enterprise Estonia's chief lawyer and his Ministry of Finance counterpart finished drawing up a base for the decision which stated that Ermamaa's business plan would be put on hold for five years but did not specify a recovery amount, noting that the future management of the foundation would decide the amount on a temporal basis. Alajõe claims she had never seen such a version of this decision.
February/March 2012: Enterprise Estonia goes rogue
Instead, Enterprise Estonia sent Evelin Ilves and Siim Raie, then-director of the Office of the President, a letter in which the foundation's management offered either a conditional right of recourse of €68,000 in the future or an immediate canceling of the business plan under a violation clause, which would have involved an immediate repayment of 10 percent of the support paid to Ermamaa, or €19,039. The letter also referenced the fact that the foundation had previously spoken with Raie on the matter — Enterprise Estonia claims that Evelin Ilves had requested he be involved — but made no mention of the draft decision that had been drawn up just days beforehand.
In early March, Evelin Ilves replied to the letter, stating that while the conditional repayment could be considered, the option to immediately repay €19,000 was unacceptable as Ermamaa had not violated its business plan. Alamets, Evelin Ilves, Raie, the foundation's product development director and lawyers met later that month, on March 15; recollections of the meeting, however, were imprecise or, in some cases, supposedly altogether absent.
A new recovery decision was thereafter drafted for Ermamaa with a conditional right of recourse of €19,000. Alajõe, who was familiar with the decision, which had been discussed for days, signed the decision. Alamets, on his part, now claims that he could not recall the decision having included a concrete amount.
Feeling now as though she is being framed as the sole responsible party, Alajõe claimed, "In such a situation I would have never signed the decision without being absolutely confident that this is the board chairman's firm position."
Enterprise Estonia claimed to Postimees that no written evidence of this meeting has survived and that employees of the time cannot recall any details of it either; two audits have also determined the mistake to be collective. Both the consultation and audit firm KPMG and the Ministry of Finance, however, stated that they could not figure out the cause behind these decisions, particularly as they strayed from the version of the decision drawn up in cooperation with the ministry.
Four days before Enterprise Estonia's final March 30, 2012 decision, however, the foundation's product development director had sent Evelin Ilves and Raie a draft of the decision; notably, the cover letter stated, "I am sending a draft which we drew up according to what was discussed at the March 15 meeting," implying that the decision regarding Ermamaa was in fact discussed there.
April 2015: Enterprise Estonia under Tomberg
When Hanno Tomberg, who became director of Enterprise Estonia in 2014, became aware of everything involved in the Ermamaa matter in April 2015, he found the recovery sum involved to be small and consulted with an Enterprise Estonia lawyer, who assured him that the 2012 decision was legitimate.
On Aug. 20, 2016, Tomberg spoke with Alo Heinsalu, director of the Office of the President, about the Ermamaa decision. Three days later, when Heinsalu received the relevant documents, he discussed the details of the matter with Ilves; it was unclear at the time whether the size of the recoverable sum came as a surprise to the president.
On Oct. 10, the day of the inauguration of President Kersti Kaljulaid, Ilves notified Enterprise Estonia of his decision not to continue with the business plan for operating Ärma Farm as a tourist establishment. The foundation delayed notifying the public regarding the matter until two days later, after Ilves had paid the required ten percent back to Enterprise Estonia.
Two days after that, on Oct. 14, Ilves wrote a longer post on social media detailing his understanding of the events and details surrounding the Ermamaa scandal in which he noted that he was only made aware of Enterprise Estonia's decision regarding the funds to be paid back earlier that same week.
"The fact that the president said that he only recently became aware and I on Aug. 23... Unfortunately there is some kind of inconsistency there," claimed Heinsalu.
Editor: Dario Cavegn