According to the publication, the mayor acquired a large apartment (116.6 square meters) in a favorable location in the capital's Old Town in 1995 for just 6,598.80 kroons ($371).
Heimar Lenk, chief editor of Kesknadal, told The Baltic Times that Palts "probably" owns the entire building at Kiriku Poik 4, but this is difficult to prove. According to the Estonian Register of Buildings the real estate is registered to eight people. Palts is one of them.
"This is corruption," said Lenk. "The apartments were sold without a public tender to people close to the authorities at the time. There are 500 families in Estonia without homes. The state has forgotten about its citizens while giving an apartment to someone who already had three."
A man with a shady background like this should not be managing a city with a third of the country's total population, he said, and added that he would be recommending a vote of no confidence against Palts. The Center Party may discuss the matter at its next meeting on Aug. 9.
"It's ridiculous. The price is mysteriously low. It's absurd," said Rein Putsepp, an analyst at the real estate company Pindi Kinnisvara. He added that it might have been possible to find an unrenovated house in the outer suburb of Kopli for 1,700 kroons per square meter in 1995, but not a house in the exclusive area of Toompea.
Putsepp said he would have bought the whole of Toompea if the houses were so inexpensive.
The minimum price for an unrenovated apartment in Toompea was 3,000 kroons per square meter in 1995. Today you would have to pay over 20,000 kroons per square meter for a renovated apartment in the Old Town.
"I think he should give the state the revenue he earned from this deal," said Lenk. "But I doubt he will be punished at all."
The revelations show that the opposition maintains a great deal of information about prominent Estonians. When asked how long the Center Party had known about the deal, Lenk replied that they learned about it a long time ago. It was not worth mentioning until now, because Palts, a businessman linked to the ruling right-wing Pro Patria Union, was not a well-known figure.
According to Kesknadal, Palts first rented the house from the state through his company Levicom for use as his employees' apartments and later organized the privatization of these apartments. He and his partners paid 42,000 kroons ($2,360) to the state in vouchers and two million kroons to the Estonian Institute of Humanities (Humanitaarinstituut), which rented out the rooms to cover renovation expenses.
Foreign Minister Toomas-Hendrik Ilves and a former coordinator of the work of the national security service with the State Chancellery, Eerik-Niiles Kross, were also involved in the deal as employees of Levicom.
"But we know that they are not involved with the company. They are public officials," said Lenk.
According to Kesknadal, the privatizers resold their apartments a year later through intermediaries back to Levicom. They were sold for the same price they were privatized for in order to avoid paying income tax. As the price of the privatization vouchers used in the deal increased in value by nine times during that year, the intermediaries also succeeded in cutting a good profit from the deal.
Lenk believes that the house at Kiriku Poik 4 is currently empty and that Palts is planning to resell it to a foreign company or an embassy.
"It is true that I bought the apartment, and its size is right. But in essence I bought it for two million kroons, the biggest share of which went to the Institute of Humanities and the smaller part I privatized in vouchers," Palts told journalists on Aug. 1.
He added that he had more reasonable things to do than sue Kesknadal.
He told the national daily Postimees that he did not know it was illegal at the time, otherwise he would not have done it.
Lenk believes the house was worth 10 million kroons in 1995 and costs over 30 million kroons today. After extensive renovation, it has been expanded by 500 square meters to 1,655 square meters.
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