Lipstok drilled on Hanschmidt case

  • 2005-10-26
  • Staff and wire reports
TALLINN - Bank of Estonia President Andres Lipstok has told Parliament that if Ain Hanschmidt's activities at Uhispank were proven to be unethical, he would censure the former banker.

Still, Lipstok stressed that neither an in-house audit by Uhispank nor an independent inquiry by the Financial Supervisory Authority had uncovered any illegal activity by Hanschmidt.

Hanschmidt, who quit Uhispank earlier this year, recently acquired a large interest in a firm that owns part of Tallink, the largest passenger ferry operator in the Baltics. He acquired the stake through an apparent option deal worth some 10,600 euros, though analysts say the real value of the stake is some 45 million euros.

Lipstok said that it would be extremely condemnable if proof of loan-against-holding deals was found. "The effect on the Estonian business culture would be extremely bad, very demoralizing, or whatever other words one could use here," Lipstok said.

But the central bank chief added that he had no facts about any unethical activity between Hanschmidt and Tallink. "I therefore cannot pronounce such a condemnatory opinion, as I would theoretically give the deal if it were proven in some way," he said, adding that he personally "would probably condemn" Hanschmidt's deals.

"I am not the person to condemn anyone or find anyone guilty. There are relevant institutions to do that," Lipstok said.

Lipstok has come under public criticism for not giving an appraisal of Hanschmidt's business deals. Some believe he may be involved in a conflict of interest, since after leaving Uhispank, Hanschmidt acquired, allegedly on favorable terms, an interest in the Haapsalu HMR spa company, in which Lipstok is also a shareholder.

The central bank chief is also a shareholder in Tallink, though he has said he was personally not involved in any deals connected with Hanschmidt.

Meanwhile, a recent poll has revealed that the scandal connected with Lipstok has shaken the bank's credibility.

"The Bank of Estonia, which so far had been standing out for very high and stable credibility, showed a clear fall. The central bank, which 85 percent of the population had perceived as credible in August, had lost support in the eyes of 6 percent of those interviewed," the Turu-uuringute AS pollster reported.

"The fall clearly refers to the numerous accusations against the former and the present leaders of the bank as well as to questions that have remained without answers," the company said.

Members of the bank's council have also expressed frustration at Lipstok's taciturn position on the Hanschmidt deal. The council did, however, vote in favor of Lipstok continuing as governor, as it found no conflict of interest.