Sõõrumaa denies hidden business interests in Tallinn

Businessman Urmas Sõõrumaa, set to represent his election coalition in Postimees’ mayoral candidates’ debate today, says that he has no hidden contracts regarding city property with removed Mayor Edgar Savisaar – everything is public.

The annual volume of contracts belonging to Sõõrumaa’s companies in the capital is €5.5 million. The businessman manages five of the capital’s schools, produces gas in the city’s Jõelähtme landfill, rents an office building to the city’s financial department in the Rotermann Quarter, and is the tenant of the city’s Tondi outside tennis courts.

“Had I even a single shady deal with the city, or were it true I secretly own traffic control devices manufacturer Signaal, it would be the talk of the town at the Liivalaia courthouse every week,” Sõõrumaa said, pointing to Edgar Savisaar’s ongoing corruption trial.

The Center Party city government started looking for ways out of schools’ property management contracts with Sõõrumaa after Savisaar’s removal as mayor by the court.

Renovator and property manager Vivatex Holding, owned by Sõõrumaa’s investment firm U.S. Invest, collected €4.6 million from Tallinn last year and reported a profit of €2.3 million. Vivatex is the only schools’ property manager in Tallinn that has not paid its owner dividends.

“Considering the company invested nearly €32 million in renovation of schools and borrowed nearly €24 million, the rate of return on equity is not as high as it might seem at first glance. Vivatex’ profit exceeds forecasts because Euribor has hit an all-time low,” the businessman explained.

Vivatex renovated five schools in Tallinn: The 32nd High School, Laagna High School, Pelgulinna High School, and Kalamaja Basic School. The work cost nearly €30 million based on a contract signed for a period of 30 years in 2006.

The first school to be completely renovated was the Pelgulinna High School that was reopened on September 1, 2007. It was Estonia’s first schoolhouse to be renovated in public-private partnership.

To fend off accusations his company is making too much money off renovating Tallinn’s schools, Sõõrumaa offered to complement the schools with sports halls this spring. The halls would host physical education classes during the day and private fitness clubs in the evenings.

“It would be an investment of up to five million: we would lay the cornerstones this fall and open doors next year,” Sõõrumaa said in April.

The Center Party refused the development project that would have had definite campaign appeal.

Tallinn City Office rented 1,932 square meters of office space from Sõõrumaa in the Rotermann Center to put up the city’s financial service for a period of five years. The city pays the businessman €290,000 a year.

“Reorganization of the city’s financial services brought the accounting of 279 city agencies and nine administrative units under one roof, and it was the mayor’s belief that the service cannot be located somewhere on the outskirts of Lasnamäe borough, but has to be in downtown Tallinn,” said head of the service Katrin Kendra. “The Rotermann Center won the competition because it offered the most favorable rent conditions.”

A temporary committee was formed that weighed several offers.

The financial service employs 113 people and is divided into the city treasury department (that covers financial and loan management and budgeting services, as well as a strategy unit in charge of city development and foreign financing) and an accounting center.

Sõõrumaa has the majority holding in combined heat and power company Tallinna Prügilagaas operating in Tallinn’s Jõelähtme landfill. The company’s turnover amounted to nearly €600,000 and its profit to over €70,000 last year.

“Sõõrumaa’s company won the waste gas management competition and launched its activity before I took office,” said Kertu Tiitso, member of the board of the landfill’s manager Tallinn Waste Recycling Center.

Postimees is not aware of the details of the tennis courts’ rent contract. Sõõrumaa constructed the Tere Tennis Center in Tondi with support from the city and Enterprise Estonia (EAS). The businessman later sold the outside courts to the city and has them on rent today.

To characterize his business relationship with the city, the businessman told a story of the dilapidating Linnahall building from years ago. “The city basically wanted to give me the building in 2003-2004; however, nothing came of it,” Sõõrumaa recalled. “I would have fixed it up for €50 million, and the city would have a functional conference venue today.”

Sõõrumaa added that as a major real estate developer and security company owner he might not be aware of all minor transactions his companies might have had with the city.

“I develop more than 200,000 square meters of land in the capital and employ more than a thousand people, which is why it would be naive to presume I do not have contracts with the city,” Sõõrumaa explained. “I would ask the voter: do we want people who cannot even feed their families to run this city, or should we trust it to those who give jobs to multitudes.”

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