Economic Affairs Ministry official found in financial conflict of interest

Sandra Särav, deputy secretary general for business and consumer environment at the Ministry of Economic Affairs and Communications, had failed to list Bolt stock options she owns on her declaration of financial interests. Särav says she was unaware that it is mandatory to disclose stock options on this declaration, but has promised to add them to hers as soon as possible.

Särav, who worked for Bolt from 2019-2021, first as public policy manager for the Baltics and Nordics and then as head of sustainability, told ERR that prior to the public broadcaster's inquiry, she was unaware that it is mandatory to declare stock options on one's declaration of interests.

"I didn't include them on the declaration of interests because I didn't believe it was necessary to do so," she said.

She noted that following the inquiry, she consulted with experts at the Ministry of Justice and received confirmation that stock options do indeed need to be declared as well.

The deputy secretary general promised to do so as soon as possible, adding that the relevant system was down on Tuesday and that scheduled IT maintenance is slated to take place Wednesday.

According to Särav, she was offered the stock options when she was hired by Bolt. As she worked for Bolt for two years, she earned 50 percent of these options according to her contract.

The ministry official noted that should Bolt go public, she would have the opportunity to buy out these stock options at a favorable price, i.e. turn them into shares.

"When I first started, they didn't have any value whatsoever; their value has certainly increased by now," she acknowledged, adding that she has no idea whatsoever of the options' value or whether she ever intends to exercise them.

ERR inquired Särav about the stock options in question because she recently spoke up about a European Commission proposal which also affects Bolt. Namely, the Commission wants VAT to apply to providers using online platforms to offer accommodation and passenger transport services, and estimates that with legislative changes, member states could bring in some €6.5 billion in VAT a year.

Commenting on the proposal last week, Särav said that the Ministry of Economic Affairs and Communications doesn't support it.

She noted that taxing Bolt drivers or guest apartment managers won't eliminate but rather create inequality.

According to the ministry official, those who provide these services without the help of technology still wouldn't have to pay VAT. "And then those who use a platform with which to better reach consumers to offer their services — they're essentially being punished and required to register as subject to VAT," she added.

Minister: No reason to doubt this was ignorance

Speaking to ERR on Tuesday, Minister of Entrepreneurship and IT Kristjan Järvan (Isamaa) said that he believes Särav when she says she left the stock options in question undisclosed on her declaration of interests out of ignorance.

"The requirement to disclose options is a fairly recent amendment to the law, and I have no reason to doubt that Sandra Särav left [these] options undisclosed on her declaration of financial interests out of ignorance," Järvan said.

He added that he has no doubts about Särav remaining in office as the ministry's deputy secretary general.

"She has confirmed that she'll make the necessary corrections as soon as possible, and I see no reason why she shouldn't remain in office," the minister said. "This is an extremely hardworking official who is devoted to the good of the state."

Commenting on the European Commission proposal with which Särav was involved, Järvan said that while the the Ministry of Economic Affairs and Communications has provided its opinion regarding the matter, it is within the Ministry of Finance's remit to develop Estonia's positions.

"In addition, the scope of this initiative doesn't just include Bolt, but other platforms as well through which accommodation services, for example, are provided," he noted.

"The role of the deputy secretary general for business is to protect businesses' interests, and I believe she has done so legitimately," Järvan concluded. "Should companies want dubious special treatment, then as we've seen, they should be looking for the next Kalle Pallings in the Riigikogu instead."

Secretary general: We have to improve our processes

Ministry of Economic Affairs Secretary General Ahti Kuningas called what happened with Särav unfortunate and the instructions for filling out the declaration of interests inadequate, adding that it needs to be better explained to employees what must be disclosed on the declaration.

"We will improve our processes so that people understand what is needed when declaring [interests]," Kuningas said. "We've otherwise been praised by the Justice Ministry for how well we've covered all kinds of meetings with lobbyists. I also asked Särav whether she has had any meetings with Bolt lobbyists; she told me that she has not."

The legislative amendments that expanded the requirement to submit declarations of interests to include deputy secretary generals, among others, as well as made it mandatory to disclose stock options as well entered into force in 2021.

According to Kuningas, ministry employees are provided anti-corruption training every month or so, but as Särav's case shows, this info nonetheless still hasn't reached everyone yet.

He said that he doesn't doubt what Särav has said and has no plans to dismiss her as deputy secretary general.

"Certainly not," he said. "I don't doubt for a second that she would have deliberately neglected to disclose [these] options."

Justice Ministry: Subscription or other tradable right must be declared

Kätlin-Chris Kruusmaa, an adviser at the Analysis Division of the Ministry of Justice, explained that in accordancd with the Anti-corruption Act, one must disclose on their declaration of interests subscription rights or other tradable rights that grant the right to acquire securities.

"Thus, for the purposes of the declaration, it doesn't matter whether the option holder wants to redeem shares in the future or not; what's essential is indicating interests that could potentially influence any decision-making," Kruusmaa explained.

"When filling out declarations, one must first and foremost follow the law," she continued. "Instructions for completing the declaration are a supplement to that and, similarly to the Anti-corruption Act, likewise refer to the Securities Market Act regarding the definition of a security."

The Justice Ministry official added that they are unaware of any cases in which options have gone undisclosed on a declaration of interests before.

Särav began work as deputy secretary general at the Ministry of Economic Affairs last July.

Read the article at ERR.