Center must return illegal donation despite finance watchdog shortcomings
A long-running court case has reached the stage where the Center Party must still pay back the bulk of one million euros deemed an illegal party donation has also revealed shortcomings on the part of the main watchdog body tasked with monitoring party finances.
In January this year, corruption scandal involving the Center Party and a real estate project in Tallinn prompted the resignation of Center leader Jüri Ratas as prime minister, and a coalition collapse, within hours of an investigation into the goings-on being made public.
The case ruled on on Friday predates that, and involves work done by a firm for the party's political campaigning over the period 2009-2015, which was not adequately documented or invoiced for.
In essence, a Center Party complaint were not justified, the court found this week, but at the same time another court granting the complaint and annulling the injunction had made its decisions related to inadequacies in evidence presented in the first place.
The injunction concerned a donation by Midfield OU to the Center Party in the form of advertising services provided to the appellant which ERJK deemed forbidden as Midfield OU had not presented invoices to Center or requested payment for its services.
The second-tier Tallinn Circuit Court concluded Friday that there had been shortcomings in the collection of evidence which need to be eliminated, and largely upheld a previous ruling, meaning a precept the Supervisory Committee on Party Financing (ERJK) on Center remains in force.
Election campaigning by Center not properly invoiced
Center is charged with having its election campaigns from 2009-2015 conducted by a private sector firm, Midfield OÜ, whose owner is Paavo Pettai, inadequately invoiced.
Confirmations allegedly sent via email to Pettai had been dismissed as unreliable evidence by the first-tier administrative court. Pettai allegedly did not forward these to an expert witness called to the case but instead these were printed out and added to the expert assessment at some point.
The first-tier court had said: "This printout does not provide sufficient certainty for the court that the contract partner of Midfield OÜ has indeed sent such a confirmation via email."
"As Midfield OÜ 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," the court went on.
The administrative court noted that the ERJK generally had not collected enough evidence in its administrative proceedings, adding that errors in gathering evidence were significant, as they may have affected the size of the sum Center was ordered to return to Midfield.
"Thus, the ERJK did not collect evidence to verify the link between the invoices bearing the confirmation of P. Pettai or Midfield OÜ and the appellant. Evidence presented by Midfield OÜ has not been viewed with sufficient discernment, and there has not been an attempt to check the reliability thereof through evidence that is unrelated to Midfield," the court said.
This may have affected the injunction, which thus must be annulled.
The court said that the ERJK can either conduct new administrative proceedings into the Center Party's case, collect the missing evidence or leave unproven invoices aside, recalculating the sum and issuing a new injunction to Center.
The court also left unchanged the interim injunction granted to Center on May 28, 2019, until the judgement in the litigation enters into effect, which means that the fulfillment of the ERJK injunction has been suspended until that time.
The prohibited donation must still be returned, but minus VAT.
First-tier administrative court, 2019
- April 8 2019, the ERJK imposes an injunction on the Center Party for it to return the forbidden donation, which the party contests in court.
- The ERJK deemed the donation – actually in the form of advertising services provided to Center – illicit, as Midfield OÜ had ot presented invoices to Center or requested payment for its services.
- Tallinn Administrative Court decision in late January this year challenged at the second-tier court by all the parties: the ERJK, the Center Party and Midfield OÜ.
- January 29 the administrative court grants a complaint by the Center Party and annuls an ERJK injunction on the party requiring it to return a sum totaling around one million euros and donated by Midfield OÜ, a company owned by Center's former campaign chief Paavo Pettai.
- While Midfield OÜ organized all Center's election campaigns during the period from 2009 to 2015. much of this went un-invoiced, the ERJK said.
- An email printout appended to evidence ad some point could not be deemed reliable. "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," the court said.
- The ERJK had not collected enough evidence in its administrative proceedings, and this may also have affected its calculations in making the injunction, the administrative court found.
- The ERJK can either conduct new administrative proceedings into the Center Party's case, collect the missing evidence or leave out unproven invoices, recalculate the sum and issue a new injunction to center
- The court concluded that the method of the expert used in the case was appropriate and warranted; however that were shortcomings in the collection of evidence which need to be eliminated.
Circuit court hearing, October 2021
- Second tier Tallinn Circuit Court convened Monday, October 25 and set Friday, October 29 as due date for decision.
- ERJK counsel sought the annulment of the administrative court decision and its replacement by a new one, where Center's complaint would be dismissed in full.
- Alternatively, ERJK lawyers requested a new decision reducing the amount set out in the injunction, or requiring the ERJK to amend the injunction in the light of what was stated in the judgment.
- The ERJK asked for the costs of the proceedings to be borne by the Center Party.
- Center Party requested the grounds of the administrative court's decision be changed, but that the decision be left unchanged in general.
- Center also applied for an order whereby the ERJK would pay Center's legal costs to the tune of €57,442.20.
- Midfield OÜ's lawyer applied for both the annulment of the administrative court's decision and dismissal of the appeal of the Center Party, or alternatively a decision on the precise extent to which the injunction of the ERJK remains in force.
- Center should still bear legal costs, Midfield OÜ's lawyer said.
- Circuit court partly satisfied the Center Party complaint, annulling the precept which obliged Center to return the prohibited donation to Midfield OÜ plus VAT.
- The prohibited donation must still be returned, but minus VAT.
- The ERJK must also calculate the amount of the prohibited donation without VAT indicated in the precept within 14 days as of the entry into force of the court ruling, and announce as much to Center.
- The court also left unchanged an interim injunction granted to Center on May 28, 2019, until the judgment in the litigation enters into effect, which means that the fulfillment of the ERJK injunction had been suspended until that time in any case.
Yet another, inordinately complex and long-winded corruption case engulfing the party saw its co-founder Edgar Savisaar charged with embezzling city funds for his and the Center Party's use, as well as accepting multiple bribes and illegal donations to Center, and being involved in various money laundering schemes.
In the long-running trial, which ran June 2017-December 2018, Savisaar and his co-defendants – the Center Party was also charged as a legal person – pleaded not guilty to the charges, with the exception of one, former MP and environment minister Villu Reiljan, who entered into a plea deal.
Savisaar himself saw his case wrapped on health grounds in December 2018 after it had passed up all three levels of the Estonian court system – county, circuit and Supreme Court.
This did not stop him running as an independent at the recent local elections, where he polled 445 votes in the Lasnamäe district of Tallinn, running for an electoral alliance and not Center.
While prime minister, Jüri Ratas sought the abolition of the ERJK, the party finance watchdog body, with its functions under his proposal to be performed by the National Audit Office (Riigikontroll).
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Editor: Andrew Whyte