The agency's economic crimes bureau is gathering evidence in a criminal proceeding over suspected subsidy fraud, large-scale tax evasion, document forgery, and the use of falsified documents.

Preliminary suspicions have been brought against eight individuals and four related companies, the Prosecutor's Office said on Thursday afternoon.

Police are examining whether Baltic Workboats and its executives intentionally submitted false information in income and social tax declarations to the Tax and Customs Board over the past five years to reduce their tax liabilities.

According to preliminary suspicions, company executives may have issued invoices to the company on behalf of affiliated businesses for services that were never provided, using this to pay salaries to some of the company's top employees without paying labor taxes.

Police are also gathering evidence to determine whether the company, its executives, and employees committed subsidy fraud when applying for project funding from the Enterprise and Innovation Foundation (EISA) in 2022.

One condition for receiving EISA funding is that the applicant must not have started any project-related activities or undertaken obligations, orders, or bids related to the project before submitting the application.

Based on evidence gathered during the pretrial investigation, the Prosecutor's Office suspects that the company had already signed contracts with clients for the same activities and may have begun work on the project by the time the application was submitted.

The initial assessment is that approximately €1.7 million in labor taxes may have been evaded, and EISA may have disbursed €400,000 in support based on misleading information. As the investigation continues, both the suspects and the charges may change.

State Prosecutor Sigrid Nurm said that a fair and transparent economic environment requires companies to maintain transparent accounting and honest tax conduct toward the state.

"Significant state budget funds have been allocated to support this company's operations, and the payment of that support may have been based on misleading information. At the same time, there is suspicion that the company may have failed to pay labor taxes on a particularly large scale. If the initial suspicions are confirmed, the state has suffered substantial damage both through the unjustified disbursement of support and unpaid taxes, which is why it is important to thoroughly investigate the facts in criminal proceedings," Nurm said.

Ivo Raudheiding, head of the economic crimes bureau, said the police are focused on high-impact economic crimes that undermine a fair business environment and harm the interests of all taxpayers.

"Our goal is to ensure that public funds are used legally and for their intended purpose, and that all players in business operate under fair rules. Misuse of funds like this is not just a legal violation, it harms the entire business environment and other companies that operate honestly," Raudheiding said.

Carri Ginter, partner at Sorainen and attorney-at-law representing Baltic Workboats, said the company will cooperate with the law enforcement authorities.

"I can confirm that a search was conducted at Baltic Workboats today and procedural actions are underway. This is a situation the company takes very seriously. Baltic Workboats is a major company operating in a complex and highly competitive market. For example, the world of subsidies is complex and nuanced, and disputes over whether documents meet expectations are common in Estonian courts," Ginter said.

"Sometimes the funding provider wins these disputes, sometimes the recipient does. At the moment, we do not know exactly what actions are being alleged or what specific concerns there are regarding the documents," he added.

"We are cooperating fully with the authorities and are confident that all questions will be answered. Our previous discussions have always led to reasonable outcomes, and disagreements have found constructive resolutions. Despite the ongoing investigation, the company will continue its normal business operations," Ginter explained.

The pretrial investigation is being conducted by the Central Criminal Police and led by the Prosecutor's Office.

Baltic Workboats is one of the largest shipbuilding companies in Estonia. In 2023, the company earned €1.1 million in profit on a turnover of €42.3 million.

The owners of Baltic Workboats are Margus Vanaselja and Märten Vaikmaa.

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