Then-minister of public administration, Mihhail Korb (Center), ordered a special audit in January this year to be carried out at state-owned real estate firm Riigi Kinnisvara AS (RKAS) as well as former subsidiary Erika Neli AS to establish the circumstances of the sale of a plot belonging to the former state-owned munitions producer E-Arsenal.

This plot, now the location of the recently opened Arsenal shopping center, was eventually developed by a company belonging to businessmen Aadu Oja and Reform Party heavyweight Rain Rosimannus.

The special audit, commissioned by the Ministry of Finance and carried out by Deloitte, brought out that the plot was indeed sold below market value. The short time of the auction reduced the number of competitors, and the property for €1.5 million went to a business in which Rosimannus was involved.

In addition to the Arsenal transaction, Deloitte looked into the sale of six objects more and found that RKAS had acted against regulations in force as well as its own best practices, which in the cases concerned had led to RKAS’ failure to get the maximum profit out of the sale of the properties.

At the same time, the audit didn’t identify conflicts of interest or corruption.

Plot didn’t go to the highest bidder

According to daily Päevaleht, investment holding Infortar (Tallink and Eesti Gaas, among others) wanted to buy the Arsenal plot in Tallinn in 2007. When then-owner E-Arsenal was looking to sell it to the highest bidder, Infortar won, but eventually was rejected twice.

Infortar CEO Ain Hanschmidt told Päevaleht in early 2017 that they weren’t offered an explanation. He wondered at the time who was able to put a stop to a process so big and with such a price. “And twice! But apparently we simply weren’t the right winners,” Hanschmidt said.

Infortar made two bids, one over 50 million kroons (€3.19 million), the other over 84 million (€5.36 million).

Infortar intended to use the Arsenal plot to build offices and support infrastructure for shipper Tallink Group. The plot is located close to the sea, which would have made it a good choice. Tallink’s offices were later accommodated in a new building closer to the port terminals.

Instead, the plot was sold to a company in which Rosimannus was quietly involved. At the time the plot was sold in 2012, up-and-coming Reform Party politician Taavi Rõivas, to be made prime minister two years later, headed the supervisory council of state real estate company RKAS.

The Riigikogu’s Anti-Corruption Select Committee looked into the matter. In the official documentation closing its investigation, it condemned the deal, stating that damage had been done to the reputation of both the state’s real estate administrator RKAS and public institutions on the whole. People’s involvement in transactions needed to be transparent also after a reasonable period following their exit from active politics. Anything else had the potential to damage the reputation of the state, the committee wrote.