Prime minister couldn't tell Riigikogu committee when she made Novaria loan

The prime minister appearing at the Riigikogu anti-corruption select committee sitting of Monday, September 4, 2023.
The prime minister appearing at the Riigikogu anti-corruption select committee sitting of Monday, September 4, 2023. Source: Priit Mürk/ERR

Prime Minister Kaja Kallas (Reform) was unable to state when exactly she provided a loan to Novaria Consult, a company owned by her husband, Arvo Hallik, when asked about it by the Riigikogu's Anti-Corruption Select Committee at an at times fairly boisterous sitting Monday morning.

The prime minister appeared before the committee, whose extraordinary (in the sense of scheduling – the Riigikogu is still on its summer recess) session ran for one hour from 10 a.m., ending days of speculation over when and whether she might appear before that body, and why she had declined to do so up to now.

At the same time, both Kallas and her party-mate, MP Valdo Randpere, took the opportunity to strongly criticize the committee's actions and its chair, Mart Helme (EKRE).

The committee comprised MPs from all parties, both opposition and coalition.

The session began with chairman Helme and Priit Sibul (Isamaa), who also sits on the committee, asking the prime minister about her husband's explanation of the use of the loan, which totaled €350,000, as reported by ERR News in June.

The loan has proven contentious in the wake of revelations that Hallik both had a near-25-percent stake in a company providing logistics services to Russia and bringing in revenue as a result, right down to the present, and allegedly used loan funds to set up a new, related company providing warehousing services.

At the time, Hallik said that that now investments have to be put to work in reverse, as it were, i.e. to be made liquid, in order to construct a new residential property in Kuusalu,

Hallik had said in June: "The construction of the house will start, then we amass the funds, and most of it will go towards that. We have been working on it for three years now. So far, the planning process has been going on for a lengthy period of time, and now comes the interesting part, the construction phase, which has started, so this summer we should already see it bearing fruit."

Speaking to the committee Monday, the prime minister said that Arvo Hallik had worded the explanation in a convoluted way. "If you can read the phrases 'let's reverse this transaction' and 'let's make the loan liquid'. If you understand the meaning of these words, you will grasp that you cannot both pay back a loan and build a house for the same loan, simultaneously."

"Perhaps under your understanding the loan would remain with that company yet at the same time the house would also be finished. In other words, 'reversing it' and 'making it liquid,' makes it likely very clear what will be done with these funds. If there had been a loan made to that company before, this company paid me back the loan and I would use this loan, which constitutes my money, to build a house, as a private individual," the prime minister went on.

Kallas added that her husband has at no point said that the loan itself could be used to build a house. "We are building the house as private individuals; I issued the loan to the financial holding company, Novaria Consult. Anyone who wants to know the loan's destination can pick up a copy of the Novaria Consult annual report, and take a look at it," she continued.

When did Kallas provide the loan to Novaria Consult?

Priit Sibul, somewhat tongue-in-cheek, then urged the prime minister to refrain from passing judgment on his reading comprehension level and grasp of syntax. Sibul then inquired when the Kallas loan was given to Novaria Consult, and whether it would be possible for the committee members to see the accompanying agreement. Sibul also said he wanted to see dates concerning the movement of the loan funds.

Kallas said she could not say when exactly she issued the loan in question.

The Isamaa MP then asked if this had been in 2022 or 2023.

"Since you have charged me with all manner of things, I wouldn't venture to respond to this question right now. I want to be certain, as [otherwise] later they will say that I had lied," Kallas went on.

Mart Helme, the committee's chair, said that according to publicly available data, Kallas has provided a loan to a company that has conducted business with Russia (following the February 2022 invasion of Ukraine – ed.), so the commission wants explanations on that. According to Helme, Kallas' public interest declarations state that over the course of a five-year period, Kallas' income had been significantly lower than the loan's value, ie. than €350,000. 

Helme averred that this fact also raises the issue of susceptibility to blackmail.

Kallas' response was to say that Novaria Consult conducts no other activity beyond being a financial holding company. She stated that the loan plus interest had been serviced by repayments in June, July and August this year, while she has paid income tax on the interest earned.

Kallas noted that her income as a lawyer, her original profession, had been around nine times higher than her salary as a politician.

Kallas: "I have been working for 28 years, 17 of these as a lawyer in the private sector. I have not accrued these savings just over the last five years; rather they had been earned earlier."

"I started working at a law firm very early on. I was a very good lawyer and so consequently was well-paid. I did not enter politics for the money, but because I wanted to do something for Estonia," she went on.

"As to the issue of blackmail. Is it the prime minister who has money and who doesn't have to order a basket of delicacies and drinks in the car every Friday on taxpayers' money who can be blackmailed, or the prime minister whom that was done for?"

Kallas was making an oblique reference to her predecessor as head of government, Jüri Ratas (Center).

"Come what may, I will work out cheaper to the taxpayer than any other prime minister has done," she added.

Kallas said she had not yet received repayment for a separate, €22,000 loan made to Novaria Consult this year.

Committee member Tõnis Mölder (Center) said that as he understands things, Kalla had loaned the €350,000 in 202,2 and €22,000 this year.

Mart Helme and Priit Sibul requested from Kallas if it were possible to see the loan agreement. 

She replied: "Am I obligated to submit this loan agreement? I would like to know how far this matter stretches. Is it so that they will next ask for an entire bank statement? I would like to know what concern has been left unclear in the public interest declaration that I have made, very transparently. I have been open and honest, and I have had nothing to hide."

Kallas: No such Russian business

The committee wants to ascertain, at least Mart Helme says, whether the borrowed money was also utilized in generating revenue in Russia. "We want to make sure you haven't done anything wrong," as he put it.

The prime minister answered by saying: "My husband doesn't have a 'Russian business.' They did have a very small volume of transport [relating to Russia] before the war started. They stopped it a month after this war started. They were transporting goods between two different factories belonging to their majority owner. That is all I know. However, this does not concern me, because I have provided funds to Novaria Consult, not to these companies (Metaprint and Stark Logistics – ed.). Whereas you say that money has gone to some Russian business or other, in fact, such a Russian business does not exist."

"They (ie. Stark Logistics, Hallik's firm – ed.) halted all deliveries to Russia a month after the start of the war. Then they continued to help their majority owner. So how can this be considered a Russian business? If you don't have Russian customers, you don't leave behind a single euro, ruble or dollar there, you don't buy anything there, you don't sell anything there, so upon what basis could it be referred to as a Russian business," she inquired.

Priit Sibul then asked when Kallas discovered that her husband had been engaged in business directed towards Russia.

Kallas answered that he learned everything after the media had become interested in the story, again recapping that there has been no business directed towards Russia.

Kallas: I wish to be treated on an equal footing with everyone else

The prime minister then averred that if they start demanding bank statements from her, then all Riigikogu members should provide the same.

She said: "What I want is to be treated on an equal footing to everyone else. I understand that I am told that I have higher demands placed on me than everyone else, but I don't think that is fair. I think everyone should be subject to exactly the same demands."

Committee member Eduard Odinets (SDE) proposed that in connection with the second loan of €22,000 provided to Novaria Consult, Kallas could submit a new declaration and note the date the agreement was signed and at what interest rate in the remarks box. According to Odinets, this would help to dispel any doubts and queries.

Kallas remarked that the lesson she has drawn was the polar opposite. "I, who have made everything public – if I make this public, more questions will follow."

Mart Helme then stated that the questions arise because the information is contradictory, not because it has been made public.

Eesti 200 MP and committee member Irja Lutsar said that he does not get the impression that Kallas could not have had the amounts of money in question, to provide the loans mentioned. "Anyone who works a lot has relatively little time in which to spend money," she noted.

Tõnis Mölder added that Kallas could make her income declaration from 2010 onwards public to the committee members.

Valdo Randpere, a Reform MP deputizing for committee vice-chair Eerik-Niiles Kross, changed the emphasis and asked whether any political party had asked for support, as in donations, from Metaprint.

Randpere also criticized the committee's actions in the course of its investigation of the current controversy, adding that the committee lacks the appropriate competence in the first place.

Emotions did also fly at times during the committee sitting; Chair Mart Helme and Kaja Kallas in particular having a heated exchange.

Both Kallas and Randpere also referenced allegations over Mart Helme's own sources of revenue, his time as Estonia's ambassador to Russia, and the origins of funds he used to build the Suure-Lähtru manor, in Lääne County.

For the record, the video of the entire Riigikogu Anti-Corruption Select Committee sitting of Monday, September 4, 2023, 10.00 a.m. to 11.00 a.m. featuring the prime minister is below.


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Editor: Andrew Whyte, Aleksander Krjukov

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