Parties pile up debts as businessmen stop donating money

Political parties represented in the parliament owe advertising agencies, printing houses and media companies millions of kroons.

Debts piled up mainly because of high campaign costs of Europarliament and local elections in 2009 and the fact that political donations have almost dried up.

Centre Party and IRL have also outstanding loans that they need to start repaying, while preparations for next year's general elections will require additional outlays.

Tarmu Tammerk, media analyst and board member of non-profit organization Corruption-free Estonia, says that financial problems of political parties also increase corruption risk as parties are looking for possibilities to reduce their debts. Tammerk recommends to establish a ceiling on campaign costs.

Centre Party claims that its local election campaign cost 12 million kroons, of which 7 million kroons is still unpaid. Before 2007 general elections, Centre Party also borrowed 25 million kroons.

Reform Party which claims it spent 12.6 million kroons on election campaigns last year still owes 4.8 million kroons to advertising agency Kontuur LB.

The serious financial situation of political parties is reflected by the fact that IRL which spent 8.1 million kroons in 2009 and still owes 6 million last week asked the state to pay IRL the full six-month contribution and not month by month.

Centre Party is also facing a court claim filed by advertising agency Idea AD that is claiming millions from the party for campaign services.

Most other companies that are owed money by parties say they are not taking legal action since they hope for more business in upcoming elections.

Jüri Karemäe, CEO of film company Maurum that is seeking 400,000 kroons from Centre Party says that Idea AD filed the claim in court after the Centre Party dropped them from their list of cooperation partners. "So they have nothing to be afraid of in terms of future business and were able to gladly seek the bankruptcy of Centre Party," said Karemäe, adding: "The market is limited and we don't know how loyal are parties are customers, but we are not going to disrupt this loyalty."

"We hope that we finally get out money," says Ervin Runnel, CEO of Kuma that expect that Centre Party and IRL pay their bills. Runnel admits that Kuma's customer receivables are relatively high and says that the company has managed to get all outstanding payments from the parties for earlier campaigns.

Karemäe said that the parties have additional problems since because of economic problems businessmen are no longer donating funds to parties.

For instance, Oliver Kruuda who in 2007 gave Reform Party 1.5 million kroons last year donated nothing. Also Endel Siff who two years ago donated half a million to Reform Party kept his purse firmly closed. While in 2007 Reform Party raised 14.6 million kroons in political donations, the figure last year was about 6 million.

Urmas Sõõrumaa and Jaan Korpusov who in 2007 contributed respectively 2 million kroons and 0.4 million to Centre Party, donated nothing last year. The same applies to Märt Vooglaid who in 2007 gave a million kroons to Centre Party. When Centre Party raised 15.7 million kroons in 2007 in political donations, the figure last year was 3.8 million.

IRL raised 8.5 million kroons in 2007 and only 1.2 million last year. Most of it last year came from investment banker Joakim Heleniusel.

Last year the state paid a total of 84.7 million kroons to parliamentary parties.