Party finances watchdog appeals overruling of Center Party fine

Tallinn Administrative Court and Circuit Court building, on Pärnu mnt.
Tallinn Administrative Court and Circuit Court building, on Pärnu mnt. Source:

The party financing watchdog body in Estonia is appealing a court decision which overturned a €1-million fine issued to the ruling Center Party over alleged illegal donations.

AS reported by ERR News, the second-tier Tallinn Administrative Court overturned a precept from the Party Finance Surveillance Committee (ERJK) on a technicality last month. The precept would have required Center to pay a €1-million fine – or more accurately, to return €1 million in donations, allegedly provided by former party campaign chief Paavo Pettai and his company, Midfield OÜ.

The precept was issued on April 8 2019, between the general election the previous month and the European Elections in May and a time when parties spend higher amounts than average, on campaigning.

Alleged illegal donation covered the period 2009-2015

The ERJK said that services provided by Midfield OÜ constituted an illegal donation due to a lack of invoicing or documentation, totalling €1 million over a six-year period, 2009-2015. Two Riigikogu elections, two local elections and two European elections took place during that period.

ERJK chair Liisa Oviir told ERR Thursday that the sums unaccounted for, according to the court ruling, made a very small proportion of the total at a little under €8,000 out of the entire million.

Oviir said: "Having thoroughly examined the judgment, the court's arguments, in particular that the court considered that it was unequivocally a prohibited donation, the complaint contained in the judgment, which was the basis for annulling the injunction, actually concerns only a marginal part of the total bill."

Oviir: ERJK will go to court, may issue second Center precept if this fails

"While our precept came to was €1.02 million, those invoices which the court estimates have not been sufficiently proven come to €7,700," Oviir added.

"In our opinion, this scale is such that we do not really have the opportunity to go any other way than to show in court that this has been a disproportionate decision. And, based on procedural economics, it is reasonable to improve it through court proceedings, rather than start a new [precept] process [against Center]," Oviir went on.

Even if the ERJK appeal were overturned, Oviir said, a replacement precept for Center would be possible, Oviir told ERR.

Center tried to abolish the ERJK last summer, but this was blocked by the Social Democratic Party (SDE) - a party critics say has undue influence over the watchdog (Liisa Oviir is a former SDE minister) until being ripped up when Center went into office with Reform alone from last month.

Today, Thursday, Jüri Ratas - Center's leader - proposed barring party donations altogether, presumably as a way of heading off any future issues. However, Prime Minister Kaja Kallas (Reform) and Oviir's number two at the ERJK, Kaarel Tarand, felt this was unrealistic and, with the alternative being parties financed from the state budget alone (Ratas' proposal would also have removed membership fees - not always paid by many party members - though it was not clear whether parties would still be able to obtain bank loans, as they sometimes do, under his proposed scheme - ed.) this might even lead to an even less transparent situation with party finances, Tarand said.

Timeline of Midfield case

The ERJK issued a precept to Center in April 2019, ordering it to return a  forbidden donation, on the grounds of incorrect procedure, including a lack of invoicing, which in effect stated that Midfield OÜ had conducted Center's election campaigns from 2009-2015, without invoicing or paying attention to other norms.

The sum ordered to be return came to €1 million, in the ERJK's precept.

The party appealed this and won, with Tallinn Administrative Court finding that, while the Center Party's complaints were not justified shortcomings pertaining to the evidence were overly extensive, prompting the annulment of the ERJK precept.

The court also left unchanged an interim injunction granted to Center on May 28, 2019, concerning the ERJK precept.

Center's lawyers, Toomas Vaher and Mailis Meier, said the court has drawn attention to significant shortcomings in the injunction by ERJK when it comes to establishing the actual factual circumstances. 

The lawyers said, in a joint statement that: "Neither the committee nor the experts on whose opinion the committee based itself subjected to a sufficiently critical analysis the expenses that Midfield allegedly incurred in connection with servicing the Center Party and whether these were correctly taken into account in the making of the injunction.

"The injunction made to the party, which the court annulled, is based on profit allegedly not earned, which Midfield as the provider of the service and ERJK considered to be too small. At the same time, the problem remains unsolved to this day that the committee has not identified what additional service has been provided by Midfield - in a situation where all the  invoices submitted by Midfield and the works ordered by the Center Party have been paid for to the full extent over the years," the statement went on, BNS reports.

Court: Materials not presented in way they can be considered evidence

The administrative court found that confirmations allegedly sent via email to Pettai, which the latter did not forward to the expert in the case but instead printed out and which have subsequently been added to the expert assessment, cannot be considered reliable evidence.

The court found that: "This printout does not provide sufficient certainty for the court that the contract partner of Midfield OU has indeed sent such a confirmation via email. As Midfield OU has a financial interest in the resolution of this case, the company is not impartial and the documents presented by it must be viewed with reasonable skepticism. A confirmation in the form of evidence without a signature is likewise not reliable for the same reasons."

In short, the court said the ERJK had not collected enough evidence in its administrative proceedings, while simultaneously committing errors in evidence gathering which could have affected the total sum Center ended up being ordered to return to Midfield.

The court said the ERJK: "Needs to justify why it deems these explanations reliable or what other evidence there is that reliably enables to determine a link to the party.

Ultimately, the court said while the expert used in the case was appropriate and warranted, there were shortcomings in the collection of evidence which need to be eliminated.

The ERJK was, however, permitted to appeal the ruling, which it now has, BNS reports.


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Editor: Andrew Whyte

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