Why sell a business for one kroon that is earning you a million kroons a year for other reason than corruption?
Äripäev is asking this question after looking into the deal where two founders of Estonia’s largest real estate developer Arco Vara who had major business interests in Tallinn paid almost 7 mln kroons for a cargo vessel, then rented it to a company of two prominent Tallinn City Government officials Toomas Vitsut and Toomas Õispuu and later sold the profitable shipping business for one kroon.
The central people in this scheme were Arti Arakas and Richard Tomingas, the two founders of Arco Vara, who in 2005 purchase a cargo vessel Baltic Star and rent it out to Eastern Shipping Group that was co-owned by Vitsut and Õispuu.
Not surprisingly, at that time Arco Vara had several major real estate projects in Tallinn for which it needed the support of Vitsut who in 2005 became first deputy mayor of Tallinn and then chairman of the Tallinn City Council and Õispuu who was Vitsut’s adviser in real estate issues.
Among others, it was developing a project to build an underground parking lot under Vabaduse square together with Vjacheslav Leedo. In 2006 the city allowed them to privatize 4,800 sqm of land near Vabaduse square.
Another big project was acquisition of 4.9 hectares of waterfront land or the so-called Tivoli lot that Arco Vara purchased from the City for 251 mln kroons. While competitors wondered why Arco agreed to pay such a high price for the lot, Arco managed to reach from the City an agreement to increase building volume from 45,000 sqm to 64,600 sqm which translates into a billion kroons in additional revenue. Needless to say, Arco Vara was using an inside track in this race since none of the competing bidders had even dreamed about such an opportunity.
Arco Vara had also other real estate projects from this period in which the City played a key role including a huge spa hotel project in the Passenger Port.
Source: bbn.ee