Centre, Reform and SDE all have substantial debts

Pe-election advertising for one of the parties whose finances the ERJK has highlighted, Reform, outside the offices of another, on the same list, Centre.
Pe-election advertising for one of the parties whose finances the ERJK has highlighted, Reform, outside the offices of another, on the same list, Centre. Source: Siim Lõvi/ERR

Three parliamentary political parties have substantial debts as highlighted by the Supervisory Committee on Party Financing (ERJK). One of the parties, the Centre Party, is in the current coalition government. The other two, Reform and the Social Democratic Party (SDE) make up the current opposition at the Riigikogu.

The issue particularly affects Centre, which has the largest debts, and Reform, as the parties are part-indebted to enterprises, which could be viewed either as extending credit to a party, or granting a loan, soimething which the law does not permit.

In the opinion of the Supervisory Committee on Party Financing (ERJK), the substantial debts and difficulties in making repayments suggest inadequate financial planning on part of the parties.

"Such long-term indebtedness cannot be considered a regular feature of economic activities ... since it harms the business interests of the creditor," said ERJK chair Liisa Oviir.

Centre Party

Centre was in the red to the tune of €813,000 as of Q3 2018, with over half a million of this debt being older than six months.

The party's negative net result was €240,000 2017 and €540,000 last year, with the party likely to make a loss this year too, according to BNS.

This would be significant in that if a party's net assets are negative for three years running, it is required to approach the ERJK for recommendations in overcoming economic difficulties and ensuring sustainable operation.

Earlier this year, Centre had the bulk of an over quarter-of-a-million-euro fine it had been hit with in connection with the ongoing corruption trial of party founder Edgar Savisaar and his associates put on a suspended basis pending no future infringements over a six-month period.

However, party secretary-general Mihhail Korb remained sanguine about the situation, noting that the higher recent costs came off the back of three elections over the period 2017-2019.

"There is no need to worry about the Center Party's financial situation," Korb said, according to BNS.

"It is a well-known fact that the cost of advertising is significantly higher during a campaign period. We also had to pay considerable sums to lawyers defending the Center Party in court due to the errors of the previous party leadership," Korb explained.

According to ERJK, the Center Party's largest creditor is the Initiative OÜ media agency (i.e. an enterprise).

Part of the party's debts can be alleviated by state support awarded to political parties in proportion to Riigikogu representation; in Centre's case support is around €350,000.

Reform Party

Reform holds €612,000 euros in negative assets at present, according to BNS.

It is also indebted to a private enterprise, in this case Kontuur LB OÜ advertising agency to the tune of almost €570,000 euros, the ERJK reports.

"It is true that the Reform Party has amassed obligations to our cooperation partners since the latest two elections," said Erkki Keldo, secretary general of the party.

"All these obligations shall be met according to a timetable we have agreed upon with our partners," Keldo went on without elaborating.

Reform is the only party of the three highlighted by the ERJK to be in the black at the end of the 2018 financial year.

Social Democratic Party

While SDE was only in the red to the amount of about €3,000 at the end of the 2018 financial year, the party took out a €550,000 loan this year, BNS reports.

SDE secretary-general Rannar Vassiljev said of the €175,000 debt mentioned in the ERJK report as of the end of September, €49,000 was still outstanding, which will be repaid by year end, with the bank-loan to be repaid in 2021, Vassiljev said.

The ERJK noted that of the three parties, SDE's was the only one which was highly transparent, and noted the lack of involvement with enterprises, which Liisa Oviir said could mask corruption of some kind. Oviir is an SDE member and was entrepreneurship minister 2015-2016 in Taavi Rõivas' cabinet.

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Editor: Andrew Whyte

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