Merko faces fresh corruption charges

  • 2008-12-17
  • By Matt Withers

EMBROILED: Merko head Tonu Korts has now been implicated in the widening investigation of Ivo Parbus, an advisor to the deputy mayor of Tallinn who has been accused of graft.

TALLINN - Estonia's largest construction company, Merko Ehitus, has become entangled in the high profile bribery scandal concerning Ivo Parbus, adviser to the deputy mayor of Tallinn.
On Nov. 15, public prosecutor Kadri Valing confirmed that charges of suspected bribery would be filed against the construction giant within a matter of days. The announcement came on the heels of another scandal this summer that forced the company to divide itself in two in an attempt to circumvent charges.
Now it seems this drastic strategy may have failed to achieve its aim, as the prosecutors office's investigation of Tonu Korts 's a leading executive at Merko 's has led to a company-wide inquiry. Korts has been accused of supplying a bribe to Parbus, who is accused of accepting bribes for smoothing over planning permissions at constructions sites in Tallinn.

Korts himself has openly admitted that he is currently being suspected of providing Parbus with a bribe comprising of 25,000 kroons (1,597 euros) in gift coupons from travel agency Estravel.
According to Eesti Paevaleht, Korts reportedly paid the bribe as a representative of Merko, and hence the investigation has spread to the company itself. Tiit Roben, chairman of Merko Ehitus, declined to comment on the matter since the prosecutor has yet to file charges.
"The fact that such information becomes public before it is made available to the company is regrettable. I have nothing to add," said Roben.

It is now suspected that Merko 's which is already facing strife concerning profits that tumbled 54 percent year-on-year in the third quarter 's will take drastic measures to buoy the company. An emergency board meeting is scheduled for Dec. 14 to address the new corruption crisis.
"It is clear that if confidence in Merko is not restored, the company will face difficult times," said Merko Board Member Olari Taal.

Merko's ill-repute began in 2006, when the company became entwined in a land swapping scandal involving then Minister of Environmental Affairs, Villu Reiljan.
Reiljan allegedly swapped environmentally protected land acquired by a select group of businessmen, including the owners of Merko, for highly desirable state-owned land in Tallinn.
In order to dodge pressure from the ensuing 's and still ongoing 's investigation, Merko split its business into two entities in July, becoming Merko Ehitus and Jarvevana. The latter is accountable for all charges related to the land swap scandal.

Analysts suggest that, given the company's slumping profit margin and previous involvement in corruption, the current charges are likely to land a heavy blow, painting a gloomy forecast for Merko's success in the upcoming year.