Audit: Enterprise Estonia Encouraged Ericsson to Invest Before Applying for Grants



More accusations have hit Enterprise Estonia after a Finance Ministry audit suggested that Ericsson's Estonian operation was encouraged by the state business support agency to break EU funding rules.

Ericsson Estonia, which received 1.2 million euros of support for investments, allegedly violated a rule under which investments that would have been made even without assistance are not eligible for aid, daily Eesti Päevaleht reported.

"The letter sent by Enterprise Estonia to Ericsson Estonia on December 17, 2009, recommended that they go ahead with orders for equipment, with only the invoicing and payment to take place after the application was submitted," the audit reads.

Enterprise Estonia confirmed this, saying that it applied for European aid in May 2009 at negotiations with the Ministry of Economic Affairs and Enterprise Estonia.

Officials from the funding agency and the state argue, however, that premeditation does not count and that the activity had not actually taken place before the application was submitted.

Raul Parusk, the interim head of Enterprise Estonia, said that Ericsson did not start the activities related to the project before the "yes" from Enterprise Estonia.

And Economic Affairs Minister Juhan Parts said that, while he had not read the audit, everything seemed "fair."

"We need to look at the dates more closely because the plan to introduce a measure for technology investment grants for major investors existed already before the crisis," he said.

Ericsson made a decision to buy the troubled Elcoteq plant near Tallinn at the height of the recession and later became instruemental in the economic rebound. The state provided 20 percent support for the investment.

Enterprise Estonia became embroiled in the scandal in September when it turned out that funding provided to companies as a stimulus was actually applied for ex post facto. The potential refunds total close to 10.5 million euros. Director Ulari Alamets was forced to resign.

Source: ERR