VEB Fund subject matter resurfaces along with Kallas’ name

Draft legislation by five MPs to compensate companies that lost money in the VEB Fund affair from the state budget was prepared by the legal counsel of five certificate holders. One of the motives of the bill’s initiators is to complicate Siim Kallas’ return to big politics.

The matter is so urgent that Minister of Justice Urmas Reinsalu named Kaido Kama the new VEB Fund special rapporteur even before an agreement concerning his tasks could be concluded.

Late summer of last year. An unlikely company sits down together: Jaanus Karilaid (Center Party), Artur Talvik (Free Party), and Jaak Madison (Conservative People’s Party). Not the best of pals. On any other day, Karilaid stands on one side, Talvik and Madison on the other of the coalition-opposition divide - informs postimees.ee .

However, the men share a common interest. The Reform Party has been out of the government for six months. For nearly a decade, the squirrels (Reform Party mascot – ed.) derailed investigations – and according to bolder assessments also court rulings – concerning the scandalous VEB Fund, courtesy of their “poor memory” and united front. Karilaid and Madison reason that it would be possible to unmask the culprits as long as the reformists remain in the opposition.

Court ruling on July 30 last year, Talvik is sold: the matter cannot very well be left alone.

The trio meets on several occasions. It is agreed the matter will be taken up by the Riigikogu Legal Affairs Committee Karilaid is chairman of. The bill reads that a select number of former VEB Fund claimants will be compensated with interest. This is Siim Kallas’ nightmare. Kallas asked the Riigikogu not to use taxpayer money to satisfy claims when he appeared in front of the Riigikogu VEB Fund select committee in 2014.

The text of the bill is not handled by legal affairs committee officials. Karilaid and Talvik receive help from counsel Indrek Leppik from law firm PwC Legal. Leppik is one of the said lobbyists – he represents several VEB Fund certificate holders. So far, the claimants have lost every step of the way, down to the Court of Justice. A political decision is their last hope.

The bill seeks compensation for five certificate holders: AS Akke, AS Tartu Lihakombinaat, AS A.O. Imbi, AS Saare Kalur, and AS Pärnu Kalur Holding. The companies would be paid the principal sum of $5 million plus interest amounting to $11 million. The latter as compensation for 15 years of inactivity.

Talk that the money would come from the budget of the main culprit Bank of Estonia is nonsense. The money would be taken from the central bank’s profit it pays into the state budget annually. The sum has been around €7-8 million in recent years. Allocating half of the profit share for VEB Fund compensation payments would result in a repayment period of four or more years.

Center Party Deputy Chairman Jaanus Karilaid says that while the bill revolves around money, its elements are still up for negotiation. The true aim goes further. “We want to take the VEB Fund case to pieces from start to finish. Hold a hearing in the legal affairs committee. Only then can we start thinking about whether anyone deserves compensation,” Karilaid said.

Jaak Madison said that the idea of the entire plan is to put the VEB Fund back on the agenda. The bill would only constitute the first step. “Securing compensation would take care of parties that have suffered damages. The next stage would be declassifying the case materials.”

Madison says that state secrets currently protect an internal security service document and recordings of Riigikogu VEB Fund committee hearings. “The possibility to bring these things to light one after another would be cathartic for Estonia,” he believes.

Another piece of the puzzle is probably Minister of Justice Urmas Reinsalu’s (IRL) recent decision to order a new VEB Fund special report to be compiled by former politician Kaido Kama. Kama served as justice minister when the fund was created and was skeptical of the plan from day one.

Campaign in jeopardy

The Estonian political landscape is electrified. The decision for a special report means the VEB Fund subject matter will remain on the agenda throughout the 2019 Riigikogu elections campaign. Many will find it easy to criticize the Reform Party’s first family should Kaja Kallas be elected its chairman.

“I would not multiply this,” Talvik says. “Siim Kallas is still in active politics, and we should remind him that this kind of political culture has had its day. And Kaja [Kallas] should acknowledge as much.”

Talvik says that for him the idea behind the initiative is to give the saga a political evaluation. Governments and parliaments headed by the Reform Party have not done it so far.

Talvik does not believe compensating VEB claims would be unfair to the taxpayer. “If the taxpayer asks why they need to fund this, bailing out the banks was also an operation to save the Estonian kroon at the time. We should not forget that,” he says.

Talvik, Karilaid, and Madison hope that Kama’s special report and the fact the Reform Party is in the opposition will result in the VEB Fund affair being talked about more or less how it happened.

The justice ministry told Postimees that a contract has not been signed with Kama and details remain undecided. If the ministry says Kama should look at the entire VEB Fund saga, Kaido Kama has different information. “The task in front of me concerns this particular bill, and that does not equal going through everything that took place decades ago,” he said. Kama refused to answer further questions.

Artur Talvik said that the bill has plenty of off-stage support in the Riigikogu, while it could disappear. “There could be more if the social democrats get behind it. Many want to see the matter cleared up or the Reform Party reminded of it,” he believes.

Former Riigikogu VEB Fund Select Committee chairman Rainer Vakra (SDE) says that compensation needs to be considered but adds that the social democrats’ votes will depend on the sums ordered. Vakra also said that declassifying the documents might not reveal the true beneficiaries of the fund. “Despite our efforts, we could not answer the question of who withdrew the money in Russia. And the internal security service does not have that information in their files either,” Vakra says.

Viimsi Municipality Mayor Siim Kallas, who created the VEB Fund as director of the central bank at the time, told Postimees that he is still against compensation from the state budget. He believes the state owes entrepreneurs nothing as the damage was caused by Russia.

Read more news of Tallinn on our site.

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