The Public Prosecutor's Office says it suspects five people, and the coalition Center Party, of criminal involvement in the Porto Franco real estate case. Among the five people Secretary General of the Center Party Mihhail Korb, adviser to the Minister of Finance Kersti Kracht and businessman Hillar Teder.
The case revolves around a €39-million loan granted by state credit agency KredEx in summer for the Porto Franco development in Tallinn, ostensibly money meant for businesses hit by the coronavirus pandemic.
State Prosecutor Taavi Pern said at a press conference on Tuesday the Center Party is suspected of trading in influence (also known as influence peddling). Four persons have been detained for the purpose of preliminary proceedings.
"The final decision will be made by the court, of course," Pern said, according to BNS.
Pern said that the suspects Teder and Kracht agreed to a deal for a favorable outcome for Teder.
"Kersti Kracht and Hillar Teder are also suspected of concluding a money laundering agreement and Kracht of influence peddling. The Center Party is likewise suspected of influence peddling," Pern said.
Kersti Kracht has worked as an adviser to finance minister Martine Helme (EKRE).
Pern noted that Teder and Korb are suspected of having agreed that Teder was to donate up to a million euros to the Center Party ahead of this autumn's local government elections and in return, a company with links to Teder was to receive the loan it had requested.
The chain of events that began in spring 2020, Pern said.
Procedural steps are being carried out on Tuesday in several locations linked to the suspects, BNS reports.
Pern explained that if the prosecutor's office learns about information indicating that favorable decisions may have been bought from political figures, it has an obligation to check this information by launching criminal proceedings.
Pern said: "Evidence gathered from mid-January last year until now indicates that various crimes have been committed, on the basis of which public procedural steps were started today against the suspects."
ISS: Investigation underway, will determine if case threat to national security
A spokesperson for the ISS says the organization is conducting an investigation into the matter in accordance with its role and in the interests of preventing a possible threat to national security.
"Whether or not a threat to the state's security exists is currently being determined," the spokesperson said, BNS reports.
ISS spokesperson Harrys Puusepp said that the authority is conducting proceedings into the matter due to the state having granted it the power to investigate the case and prevent a possible security threat.
"Whether or not a threat to the state's security exists is currently being determined," he said.
Puusepp highlighted that Korb and Kracht are the only representatives of public authorities declared as suspects in the case.
State prosecutor Taavi Pern noted that altogether four people have been apprehended in relation to the case.
"Whether or not we will seek custody in any of the individuals' cases will be decided after procedural steps have been concluded," Pern added.
Pern noted that in addition to Korb, Kracht, Teder and the Center Party, one more person is suspected of aiding and abetting bribery, and another of influence peddling.
Ratas: I'm not under suspicion, my party is being investigated
Earlier on Tuesday it was announced that members of the Internal Security Service (ISS) are investigating the offices of state credit agency KredEx, in connection with the Porto Franco real estate development in Tallinn. Porto Franco received state aid to the tune of €39 million last year.
Prime Minister Jüri Ratas (Center) said the Center Party is also the subject of the investigations.
Ratas told Vikkerraadio broadcast "Stuudios on peaminister" Tuesday that he was aware of the ISS' activities, directed by the prosecutor's office, adding that he could not elaborate on the search or its rationale, though he did note that the Center Party is under suspicion in a criminal investigation, or on the brink of becoming so.
Ratas said: "I have asked if there is any suspicion today about me as the party's chairman, and the prime minister. Both the prosecutor's office and the ISS have confirmed that no, I am not. But the truth is that these procedural steps are also being done in connection with certain members of the Center Party."
The party's secretary general Mihhail Korb is also the subject of the ISS investigation, Ratas said.
In response to a question whether the investigation into Porto Franco was in any way related to businessman Hillar Teder's €60,000 donation to the Center Party, which was made in support of WRC Rally Estonia, Ratas said: "I do not say these are volatile connections. Today's procedure has begun on behalf of the public. I don't think these are volatile links. The allegations are very serious. "
Porto Franco, which, when completed, will combine residential, office and retail space and is located in the harbor district of central Tallinn, is majority-owned by Rauno Teder, Hillar Teder's son.
Hillar Teder has donated nearly €1.3 million to four political parties since 2013
Hillar Teder donated €60,000 to the Center Party in the third quarter last year. Teder also donated €60,000 in the fourth quarter of last year.
Since 2013, Hillar Teder's firm has donated a total of €1,259,000 to several political parties in Estonia, ERR reports, based on records from the body tasked with monitoring party finance.
The Supervisory Committee on Party Financing (ERJK) database dates back to 2013, and according to its information, Teder has been regular doneor political parties in 2013-2015 and again 2019-2020, after a hiatus in 2016-2017.
He has donated to parties currently in office, though opposition Reform has received over half the donations, totalling €681,000 in that time, though primarily when the party was in office under Andrus Ansip, and then Taavi Rõivas.
Teder has provided €368,000 to Isamaa, though nothing in the years 2016-2018 (when the party was then known as IRL).
As noted Teder donated to Center last year, and also in 2019, the first year he gave money to the party since the records began. In total Teder has provided Center with €170,000.
The opposition Social Democratic Party (SDE) has received €40,000 from Teder, primarily in 2014-2015 (when the party was in office – ed.).
Neither EKRE nor Eesti 200 have received donations from Teder, ERR reports.
Prosecutor's office have not said yet which KredEx areas under investigation
The prosecutor's office has not yet said which areas of KredEx are under investigation nor whether there are any criminal suspects.
Ratas added that Porto Franco is a development of national importance, which is an added reason for ISS' involvement, he said.
The €39-million loan, issued last July, hit criticism since loans of that nature were intended for businesses which were demonstrably hit by the effects of the coronavirus pandemic. Since Porto Franco is an ongoing development and is not completed, critics said that this was harder to argue than in the case of functioning businesses which received large loans, such as ferry line Tallink.
Private property developers have also reportedly complained to the European Commission about the issue.
State prosecutor Taavi Pern and Harrys Puusepp of the ISS are due to give a press conference at 4 p.m. on Tuesday to comment further on the investigation.
The Porto Franco KredEx loan will be granted by the state in installments of between €5 million and €15 million, and is secured on the mortgage on the Porto Franco real estate site, ERR reports.
This article was updated to include Jüri Ratas' comments that the Center Party was under investigation, and on the links between Hillar Teder, Rauno Teder and the Center Party, and the announcement at a press conference about the five suspects, and information on Hillar Teder's party donations, and further comments from Taavi Pern and from the ISS.
Editor: Andrew Whyte