Foreign minister denies business holdings present conflict of interest

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Estonian Minister of Foreign Affairs Margus Tsahkna (Eesti 200).
Estonian Minister of Foreign Affairs Margus Tsahkna (Eesti 200). Source: Priit Mürk/ERR

Having various business interests including in a defense-related firm does not represent a conflict of interest, Foreign Minister Margus Tsahkna (Eesti 200) says, since he does not sit on the board of any of the private sector firms he has links to.

Tsahkna is a stakeholder in several firms, including one whose majority owner is media mogul Margus Linnamäe. Tsahkna says the full, up-to-date information concerning his business interests will be publicly available on the commercial register in the near future.

Tsahkna, a former defense minister and former leader of Isamaa, was made foreign minister in the Reform-Eesti 200-SDE coalition, which entered office earlier this month.

Tsahkna said that after he initially left the Riigikogu, in 2019, he had been active in business, adding that this was invaluable in gaining first-hand experience of how taxation works in practice, and how to create added value. Tsahkna recommended other politicians gain such experience.

"This helps to get to understand whence revenues arrive into the state budget, and the value of every euro, as distributed by politicians," he said.

As to whether his business holdings represent a conflict of interest, now he is back in politics and indeed the government, Tsahkna said that they did not, noting that under current law a cabinet member cannot also sit on the management board or supervisory board of any private sector firm.

"In line with this, I have resigned from the management boards of all private companies I had links to, while the corresponding information will be reflected in the business commercial register in the near future," Tsahkna continued.

The minister added that he has consulted with various regulatory institutions in relation to his actions, adding that this is sufficient further to rule out any potential conflicts of interest.

"None of the companies I have links to have taken part in any public procurement processes, nor will they take part, meaning I do not have any direct conflicts of interest, though I am prepared to take any additional steps [to ensure this] where necessary," Tsahkna said.

One of the companies Tsahkna has a stake in is Defendest OÜ, which operates in defense-related areas.

Via Defendest, he reportedly is also a shareholder in MJT Varand OÜ, whose main areas of activity are entertainment and leisure, and whose co-owners are Tarmo Tamm, a member of Eesti 200, and businessman Priit Alamäe, who was Eesti 200's most significant donor last year.

Eesti 200 took in more in donations in the first quarter of 2023 (Q1 2023), which coincided with the March 5 Riigikogu election, than any other political party.

Tsahkna is also a 50 percent shareholder of Kannistuku Varad, which was founded a little over a year ago and deals in real estate.

The company's reported turnover for Q1 2023 stood at €1,680, though it did not have any employees listed on payroll.

Defendest OÜ itself has been in operation for over three years, and reported a 2021 revenue of €66,000, with profits just under €37,000, in the same year.

Between December 2022 and the end of February this year, the company reported a taxable revenue of €70,000, while it 2021 report stated Defendest's main interests were mediating potential export contracts for Estonian firms, and establishing contacts with governments and international organizations; the company's longer-term clients have to date mainly been defense and IT-related firms, the report added.

Tsahkna also holds a 20 percent share in MM Hospital OÜ, whose majority shareholder (via a network of other registered firms) is businessman Margus Linnamäe.

Linnamäe is a comparatively reclusive media, pharmaceuticals and entertainment mogul; Postimees Grupp, which owns the daily newspaper of the same name, its regional variants, news wire BNS, TV channel Kanal 2 and radio station Kuku, in addition to other titles, is a Linnamäe-owned concern.

According to the commercial register, Linnamäe is also the real beneficiary of MM Hospital, which, since it has only been active for a short period of time, has not had to submit an annual report yet.

The commercial register shows one employee on MM Hospital's payroll, while €23,000 in labor taxes was paid out in Q1 2023. No taxable turnover was reported over the same period.

Under current Estonian law, all government ministers must declare all their economic interests to the Government Office, by May 31 each year. The declaration then constitutes open, public information.

State Secretary sent letter to ministers Thursday, reminding them of their obligations

State Secretary Taimar Peterkop sent a communique to ministers Thursday, reminding them that under the terms of the Government of the Republic Act, a member of the government may not sit on the board of any joint-stock company, private company, or for-profit cooperative.

Government ministers also may not act in a private sector role on the basis of an employment contract or provision of services contract, with the exception of scientific and pedagogical work.

Peterkop also reminded ministers of best practices relating to dealing with lobbyists, which requires ministers to make public the themes covered at any meeting or communication with lobby groups or individuals, the name or names of the lobbyists, organizations and/or their representatives, and the date of the meeting.

This information must be published quarterly. This requirement was put in place in 2021, while moves were underway last year to set up a register of lobbyists also - Riigikogu MPs (government ministers do not sit at the Riigikogu) were strangely lukewarm about this prospect, it was reported at the time.

This article was updated to include information on the letter sent by State Secretary Taimar Peterkop.


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Editor: Andrew Whyte, Karin Koppel

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