Solid reputation of Pro Kapital shakes

  • 2001-07-26
  • Kairi Kurm
TALLINN - Pro Kapital, the largest real estate development firm in the Baltics, has drawn a lot of media attention in the last week, ever since police carried out a search at the home of former CEO Ilona Saari.

Saari, 29, was accused of making an 18 million kroon ($1 million) purchase of real estate in May without the consent of the company's management.

According to police, Saari purchased two properties on Logi Street in Tallinn for 68 million kroons from the company OU Hansameister, where she acted as a supervisory council member. She bought the property for 50 million kroons for OU Hansameister, then bought it from that company as the representative of Pro Kapital a couple of weeks later.

The business daily Aripaev wrote that the process of buying property by firms related to Ernesto Preatoni, the owner of Pro Kapital, and then reselling them to Pro Kapital for a considerably higher price was common practice at Pro Kapital.

The newspaper wrote that Preatoni had drained the company of hundreds of millions of kroons in recent years to the financial gain of Pro Kapital employees.

Preatoni said that the facts in the Aripaev report were false. He said he would consider stopping his investments in Estonia if the negative press continued.

"They say that we are using offshore companies. The shareholders might be using them, but we are not," said Preatoni. "The companies we are dealing with are not related to my money. They might be related to people that I know."

Pro Kapital's management is also accused of attempting to issue new shares of the company to firms related to Preatoni for a considerably lower price and ignoring the interests of small shareholders. The shares will be issued for 30 kroons to current shareholders and FVT Financial VIP Tourism Ltd., starting August 15. The subscription period for the latter is two months, while shareholders have two weeks.

Aivar Pihlak, a member of the board at Pro Kapital, said that it is obvious that it takes more time to work with potential investors who do not know the company. He said that two weeks is enough for the subscription.

The Tallinn Stock Exchange suspended trading in shares and convertible bonds of Pro Kapital on July 20 and launched its own investigation.

Trading in Pro Kapital securities will be resumed after Pro Kapital Group refutes through the bourse's information system the accusations made by press, the stock exchange announced. Preatoni told The Baltic Times that an announcement would be made this week.