Centre donor denies link with city council decision favouring his company

Artist's impression of Fausto Capital's proposed Fahle Park/Sossi Quarter development in central Tallinn.
Artist's impression of Fausto Capital's proposed Fahle Park/Sossi Quarter development in central Tallinn. Source: Fausto Capital

A company belonging to a major Centre Party donor received a planning decision in its favour on 24 January, namely the cancellation of two long-standing detailed plans concerning a plot of land in central Tallinn know generically as the Sossi Quarter. Removing the plan enables the company, Fausto Capital, to press ahead more easily with developments in the area. However, since Centre is the majority party on Tallinn's city council, eyebrows have been raised at the decision following a €20,000 donation to Centre's coffers near the end of 2018 by Sven Mihailov, part-owner of Fausto. Mr Mihailov denies any chain of cause and effect.

''We've been working on various projects for around four years no and been running four or five detailed plans for a lengthy period of time. There's certainly no connection between these two things,'' said Mr Mihailov, one-third shareholder in Fausto OÜ, a major real estate developer.

Moreover, this was the first donation Mr Mihailov had made to Centre, though he had previously donated to other parties, he said.

"I think that what the [Centre Party] has been doing in recent years has been activity that [promotes the business environment] and I would like to support it," said Mikhailov. "In Tallinn, I think things have improved in recent years. My conduct has been right and proper," he added.

There are no ulterior motives to his donations, Mr Mihailov went on, though he may well make further donations to Centre in the course of the year, he said.

City council concurs

Andrei Novikov, one of seven deputy mayors of Tallinn, said that matters relating to detailed plans are all quite normal in the work of the city government and in all parts of the law.

''I have experienced various cancellations [of detailed plans] in every council I have been in. Who is behind these companies, I have no interest,'' said Mr Novikov, adding he had had no contact with Mr Mihailov and did not know him.

''If a person decides to support the Centre Party, it is either a world-view question, or he/she thinks that the Centre Party has done the right things, both nationally and in the city. All donors and donations are public: If anyone wants to support the party, there is no point in fearing that," said Andre Hanimägi, Centre spokesman.

In early 2018, Fausto Capital applied to Tallinn City Government to cancel a detailed plan for property owned by Fausto at the Sossi Quarter between Tartu Highway, Masina street and the Tallinn-Tapa railway in Tallinn. The company wanted to merge all its properties there and had plans to construct a building complex consisting of reconstructed buildings and their extensions, in a site alternatively known as Fahle Park.

Mihailov second biggest Centre donor in Q4 2018

The detailed plans on two properties, both around 20 years old, were cancelled, with Fausto hoping to get building permission based on Tallinn City's general plan, and not a replacement detailed plan.

The new plan was approved by Tallinn City Council on 28 November.

On the basis of the data submitted to the Supervisory Committee on Party Financing (ERJK), Sven Mihailov made a donation to Centre worth €20,000 on 21 December.

This was the second largest private donation to the Party in the fourth quarter of last year after Urmas Sõõrumaa's €50,000 pledge.

Tallinn City Council approved the cancellation of the detailed plans at its meeting on 24 January, with 49 of a possible 68 votes in favour (the votes came from all parties).

In addition to the Sossi quarter currently under development, Fausto also owns several large developments in Tallinn and elsewhere, including at Maakri 23a (the Postimees House), the nearby Kompassi House, the Vironia Centre in Kohtla-Järve, the Rappel Centre in Rapla and a number of other locations.

The owners of the company are Sven Mikhailov and Kenneth Karpov. In 2017, Fausto Capital earned €5 million in revenue and €17.9 million in profit. Profits largely derived from a change of €15.1 million in the value of investment property, it is reported.

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Editor: Andrew Whyte

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