Two members of the Rural Development Foundation's management board have been detained by the Central Criminal Police over the mispayment of loans for coronavirus-struck companies.
The Central Criminal Police said on Wednesday suspicions of abuse of trust had been brought against board members Raul Rosenberg and Madis Reinup.
In 2020, the Rural Development Foundation (Maaelu Edendamise Sihtasutuse) offered economic support to businesses impacted by the coronavirus crisis. This money was meant for struggling bio-economy and agricultural enterprises.
According to the suspicion, the foundation issued over €24 million worth of loans to at least 42 businesses that did not meet aid requirements.
Kairi Kaldoja, chief prosecutor at the South District Prosecutor's Office, said it is crucial the money issued by the state is used as intended. He said evidence gathered so far indicates the rules and conditions were "knowingly overlooked".
"This is indicative not of a small human error but of a criminal offense," he said.
Ats Kubarsepp, head of the bureau for the investigation of corruption crimes at the Central Criminal Police, said the police paid special attention to the lawful use of measures aimed at mitigating the impact of the coronavirus crisis.
Speaking about the loans issued by the Rural Development Foundation, he said: "Among others, loans were granted to businesses created immediately before the coronavirus crisis and to those whose area of operation did not match the target. Support was also distributed to businesses that had seen their revenue grow."
"There is much that still needs to be ascertained during the proceedings, including the background and reasons for these decisions," Kubarsepp said.
Current information shows approximately one-fourth of the €100 million allocated for loans on favorable terms did not reach businesses in need. Instead, the funds were granted to enterprises that did not actually meet the requirements.
At present, there is no reason to suspect any of the businesses of committing a criminal offense, the police said. The collection of evidence continues.
The prosecutor's office has filed an application with the court to remove the two suspects from their positions as members of the Rural Development Foundation's management board.
Pre-trial procedure in the case is being conducted by the bureau for the investigation of corruption crimes of the Central Criminal Police and the investigation is being led by the South District Prosecutor's Office.
Minister of Rural Affairs Urmas Kruuse (Reform) said he proposed to the chairman and the council to suspend the employment relationship with Rosenberg and Reinup and convene an extraordinary council.
He said problems had been pointed out last year when the Reform Party was in opposition. It was argued at the time that money should have been given to sectors in need first and each area dealt with separately, Kruuse said.
"In which case, there would have been no hasty possible financing decisions that could have reduced transparency," he said.
He said the issue was discussed with the Supervisory Board in January after the change of government.
"Therefore, some of the observations made by the investigative bodies were not unexpected. The question is if and how deep their so-called criminal or corrupt content is," Kruuse said.
Former minister has no issues with board's decision
Former Minister of Rural Affairs Arvo Aller (EKRE), who was minister at the time of the distribution of the money, told "Aktuualne kaamera" on Wednesday he did not see any problems with the board's activities.
"I have no criticism of the management. I think it is a completely subjective and unfair arrest of the leaders. I do not know what is behind it, but time will tell," he said.
He said his job at the time was to make sure €200 million was given to the countryside, in unprecedented circumstances.
Editor's note: This article was updated to add comments from Urmas Kruuse and Arvo Aller.
Editor: Helen Wright