Estonian PM warns corruption at Port of Tallinn signals national security threat

By bne IntelliNews August 27, 2015

Estonia's prime minister warned on August 27 that corruption charges against senior officials at the state-owned Port of Tallinn constitute a threat to national security.

The port's CEO, Ain Kaljurand, was detained on August 26, along with board member Allan Kiil on suspicion of corruption. According to prosecutors, the pair is accused of taking bribes over several years. Government officials said they have been under investigation for some months.  However, no figures have been made public. Six others accused of supplying the graft money have also been arrested, according to the ERR public news agency.

Prime Minister Taavi Roivas called the corruption allegations a security threat to the nation and called on the company to cooperate with the authorities. “Of course it is regrettable that these very serious suspicions have arisen. If they are confirmed, then it is not just great greed but also a very serious security risk,” he said.

The two board members resigned on August 27, the port said, adding that it has appointed Marko Raid, the current chief financial officer, and Carri Ginter, attorney and lecturer, as temporary members of the management board.

The Port of Tallinn operates five ports and services nearly 10mn passengers each year. It is one of the state's biggest cash cows, contributing around €40mn in dividends and taxes each year.

Economy Minister Kristen Michal said the case shows that state companies need to be better handled, insisting he already has a plan to reorganize the leadership structures of the Port of Tallinn, Estonian Railways and other state-owned companies. 

However, the opposition says the detained officials are closely connected to the ruling Reform Party, and claim the party helped them remain in the 2011 and 2014 board elections. Michal counters that planned changes in the port’s management could not be performed due to the ongoing investigation.

The case is just the latest to stalk the transport sector in the Baltics, as the standoff with Russia piles on the pressure. The head of Latvian Railways, Ugis Magonis, was arrested on corruption charges earlier this month.

The Latvian case has also raised concerns in Estonia. Skinest – owned by Oleg Ossinovski – is reported to have paid the Latvian rail boss €500,000 as a bribe. Son Jevgeni Ossinovski is the new leader of Estonia's Social Democratic Party – a junior member of PM Roivas' precarious rainbow coalition – and has been mooted as a possible PM if the current ruling coalition collapses.

Meanwhile, Latvia is busy pressing Russian Railways over plans to launch major repairs of its tracks leading to the country. Riga worries its transport sector could lose billions should the work halt Russian raw materials cargo, which make up the bulk of the Latvian industry's business. 

There is speculation that the sudden announcement of the repair works was a reaction to the arrest of Magonis, who is a close friend of Russian Railways CEO Vladimir Yakunin. 

Related Articles

EBRD invests in Port of Tallinn to support IPO

The European Bank for Reconstruction and Development (EBRD) has acquired a 3.6% stake in the Estonian infrastructure company AS Tallinna Sadam, the manager of the port of Tallinn, supporting the ... more

ECB holds a meeting in Riga without Latvian central bank governor

The European Central Bank governing council met in the Latvian capital Riga on June 14 with the host, the beleaguered governor of Latvijas Banka Ilmars Rimsevics, not attending. Rimsevics ... more

Latvia approves self-liquidation of troubled ABLV bank

The Latvian financial market regulator FKTK has approved the self-liquidation of ABLV, the third largest Latvian bank that is closing down over allegations of money laundering, FKTK said on June 12. ... ... more