The District Prosecutor's Office for Economic and Corruption Crimes said the purpose of the investigation is to determine whether the actions of any individuals may have caused damage to the state-owned company.

Evidence is currently being gathered, and no one has yet been formally charged with committing a crime, a spokesperson for the prosecution added. Whether the findings of Eesti Energia's special audit — or any additional evidence collected — provide grounds to accuse anyone of a criminal offense will be determined during the investigation.

The special audit of Eesti Energia, commissioned by the Ministry of Finance and made public in November last year, identified several shortcomings in the state-owned energy company's management and operations between 2020 and 2023.

According to the audit's final report, there were serious environmental violations at Eesti Energia's subsidiary Enefit Power during that period. The report also highlighted that Enefit Power incurred estimated losses of €176 million from liquid fuel hedging and derivative transactions. Deficiencies at Elektrilevi, another Eesti Energia subsidiary, endangered the operation of the distribution network, potentially disrupting a critical service.

Hando Sutter, who chaired Eesti Energia's management board from 2014 to 2023, now serves as CEO of the Estonian Employers' Confederation. Andrus Durejko took over as group CEO in April 2023. Enefit Power was led by Andres Vainola until September of last year.

One of the environmental violations flagged in the audit was that Enefit Power's power plants emitted more pollution than allowed under their integrated environmental permit.

Rainer Vakra, director general of the Environmental Board, said the agency has now fined Enefit Power €190,000 in the misdemeanor case. The decision concerns violations of air pollution limits at the Eesti Power Plant in Auvere in 2023. The company was also fined for failing to carry out mandatory air pollution measurements at the time.

Enefit Power, which now operates under the new name Enefit Industry, has the right to appeal the decision until May 17, according to the Environmental Board. The decision has not yet entered into force.

An Eesti Energia spokesperson said it is still too early to say whether the company will contest the decision, as it is still reviewing the details.

In addition to this misdemeanor case, the Environmental Board has another ongoing proceeding involving Eesti Energia, which concerns deficiencies in continuous emissions monitoring and the exceeding of emission limits in the shale oil industry, Vakra said. He added that this investigation is still at a stage where no further details can be disclosed.

In January, the Environmental Board fined Enefit Power €110,000 for burning toxic phenol water without a permit in the boilers of its Enefit 140 shale oil production plant in Narva, thereby polluting the air. The company appealed the fine, but the Viru District Court dismissed the complaint. Enefit Power has the right to file a cassation appeal with the Supreme Court by the end of May.

Vakra noted that the Environmental Board would have initiated all three misdemeanor proceedings against Eesti Energia even if the special audit had not highlighted the deficiencies.

Environmental Board: Eesti Energia's new management on the right path

Vakra emphasized that the proceedings involving the energy group mainly concern past activities and that many of the issues have already been addressed.

"The real story here isn't actually about these historical fines. What we're seeing is that Eesti Energia has now taken major steps forward, and there's been a significant change in attitude. We've been able to make clear improvements without having to shut down electricity or oil production — which is always speculated whenever fines are mentioned, as if the green transition is destroying Estonia's oil industry. That's simply not true. Yes, there were clear violations two years ago, but these were preventable and can be avoided in the future," Vakra said.

He added that the company has installed additional filters to capture dust particles, implemented random monitoring and reviewed practices such as the storage of wood waste.

"The goal has never been to issue fines or hand out penalties. The goal is to ensure that Eesti Energia's energy production — both oil and electricity — operates with the smallest possible environmental footprint. I can say that today we have a very good working relationship," Vakra said.

Company still mulling claim against former heads

The special audit revealed that liquid fuel hedging and derivative transactions resulted in €176 million in losses for the company between 2020 and 2023.

The audit stated that Eesti Energia's former management board could be accused of breaching its duty of care in 2021 by failing to consider possible and necessary measures that could have reduced the losses. It also noted that Enefit Power might have a contractual claim for damages against Eesti Energia under its service agreement.

Eesti Energia's current CEO, Andrus Durejko, did not rule out the possibility of filing claims for damages against the company's previous management last fall. At the time, Durejko said that would require further analysis, after which a decision would be made on whether pursuing such claims would be justified.

Eesti Energia spokesperson Mattias Kaiv said that, so far, the company has not filed any claims, as it is still assessing whether doing so would be warranted.

"The volume of materials that need to be analyzed is large, so the process is taking time. Whether the directors' liability insurance applies and whether compensation can be obtained from the insurer also depends on whether management liability is established. We cannot disclose to what extent the insurance might cover the losses, as the insurance contract is confidential," Kaiv noted.

The audit also pointed out that the necessary due diligence had not been followed by Eesti Energia's supervisory board at the time. It found that the board failed to exercise the required care in early 2022 when reviewing the previous year's annual report, which clearly showed significant losses from liquid fuel hedging transactions.

However, the audit assessed that the board's inaction did not result in any additional damages to Eesti Energia.

Väino Kaldoja chaired Eesti Energia's supervisory board from 2017 to 2022. Anne Mere has chaired the board since May 2022. Several other board members also changed when Mere took over as chair.

In response to a question about whether any actions had been taken regarding the criticism of the previous board's activities, the Eesti Energia spokesperson said that all questions concerning the supervisory board should be directed to the Ministry of Finance.

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