The Estonian Ministry of Culture has been unable to complete an audit to assess the use of public funds by Shiftworks, the company responsible for organizing the Tallinn Music Week (TMW) and Station Narva festivals. The ministry has since agreed with Shiftworks' owner Helen Sildna that no public funding will be withdrawn and more time allowed for the company to put its accounts in order.
At the end of last year, the Estonian Ministry of Culture's internal audit department attempted to examine the use of state funds allocated in 2019, 2020 and 2021 to Helen Sildna's company Shiftworks OÜ. Between 2019 and 2023, the Ministry of Culture has allocated nearly €1.1 million to the company in the form of operating grants, project grants and additional financial support to mitigate the impact of the coronavirus crisis.
Upon receiving the various grants, Shiftworks agreed to keep all the necessary documents in order and to allow the Ministry of Culture to verify how the money was being used. Otherwise, according to the terms of the contract, the grant money would have to be returned.
The main stumbling block for the auditors, who began looking into Shiftworks' accounts last October, related to the forwarding to them of an extract from the accounts.
Among other things, the ministry was trying to assess whether or not Shiftworks, which had received grants from several sources, namely the Ministry of Culture, the Integration Foundation, the Cultural Endowment of Estonia and Enterprise Estonia (EAS), had submitted the same expense documents twice to different donors.
Although the Ministry of Culture repeatedly requested accounting data from Shiftworks, the company did not provide it. In the absence of the required information, the ministry's internal audit department was also unable to provide an assessment.
Helen Sildna said, that although the ministry had previously been unable to verify the use of public funds, the problem has now been resolved. Shiftworks has now reached an agreement with the Ministry of Culture regarding the auditing of its annual accounts.
"There has been constant communication and we have sent [the ministry] quite a lot of information, but in the end it was agreed that it was important to verify the situation [regarding the use of funding] in 2022. This will be used to determine our financing agreement for next year. It was very convenient for us as well. That's how it was agreed. There was nothing else. A working meeting, just like we have always had with the ministry," said Sildna.
"The meeting was convened on the ministry's initiative. This was the proposal that was reached there together. Jointly. All parties involved were happy with this proposal. Everybody came away from the meeting feeling that it was very pleasant, and that our cooperation will continue," said Sildna.
However, The Ministry of Culture appears to have a slightly different view of the situation.
Ministry Undersecretary for the Arts Taaniel Raudsepp said, that while it had been agreed that Shiftworks will need to be audited in the future, the ministry also wants more information regarding the use of funds in the past.
"This now, is the first step and I hope that we will be able get our cooperation off to a good start here," Raudsepp said.
"The other option would have been to immediately start applying repressive measures. However, we want to improve the situation if possible," Raudsepp said. "We will make one more attempt to clear the matter up."
"The situation suggests that the company's accounts are not in order. At least, as far as I can see. In fact, there is no complete picture of how certain expense documents relate to certain projects. So, there is also work to be done. We want to be thorough, not just fast. We want to get a clear understanding of what the state of play has been and how the grants have been used," Raudsepp said.
"From our side, the deadline for us to have a clear picture is the end of this year. For the company, that may also mean it has to retroactively revise its annual accounts. And that process takes time," Raudsepp added.
According to Sildna, the reason she did not provide sufficient data to the Ministry of Culture, was due to the need to review Shiftworks' accounts.
"There was a need to revise them to make sure they were correctly labelled. They still need double-checking. [But it's] nothing out of the ordinary," said Sildna.
National Audit Office: Payments should be frozen until information received
The National Audit Office, commenting on the Shiftworks audit, said that state or local government support automatically creates a reporting obligation.
"All necessary information should be requested and document submission required. If the request is not complied with, payments should be frozen until such time as it becomes clear whether all necessary documentation exists and points to the use of funds having been appropriate," Priit Simson, head of communication for the audit office, told ERR.
He added that while the National Audit Office has not statistics in terms of how often support recipients breach their reporting obligations, it is rather uncommon.
Asked whether the audit office might wish to audit the Ministry of Culture, Simson said there is no such plan presently. "However, plans are adjusted all the time, depending on current events, reports etc.," he added.
Shiftworks, which was formerly known as Musiccase has also faced issues related to its finances in the past. In 2018, the company delayed paying some of its partners for a long period of time. Sildna justified the company's actions at the time as being due to Tallinn Music Week's rapid growth and complex funding model.
The article was updated to add comments from the National Audit Office.
Editor: Michael Cole