TALLINN - The Estonian candy maker Kalev has come under a barrage of legal heat at home and abroad for both a lack of transparency in publishing internal information and suspending payments in the output of raw material and packaging to a Kaliningrad- based confectionary.
The Estonian Financial Supervision Authority fined the candy maker last week for failing to publish in full a special audit report and was reportedly even pondering whether to start misdemeanor or criminal proceedings against the country's largest confectionary.
According to the supervision authority, the behavior of Kalev demonstrates the issuer's low level of transparency.
"Our position is that a public issuer cannot publish internal information partially but must do it in full, in a precise and correct manner," an EFSA spokesperson told the Baltic News Service.
"Kalev's possible ignoring of the legitimate order of the Financial Supervision Authority to publish internal information in full will give us grounds to consider applying for the initiation of criminal proceedings," a supervision spokesperson said.
The authority also said that the confectionary's behavior should serve as a warning to investors deciding whether to invest in Kalev stocks.
"Also, shareholders of Kalev have the opportunity to evaluate the legitimacy and economic advisability of the actions of the company's leader," the authority said.
Kalev announced to the stock exchange that it would not abide by a supervision authority order to fully publicize the audit report by PricewaterhouseCoopers.
In addition to these domestic problems, Torgovyi Dom Pribaltiiski Konditer, based in Kaliningrad, is demanding more than 14 million rubles (403,000 euros) from the company in two lawsuits, the first of which is to take place on June 14.
However, there are neither applications nor documents serving as the basis for the claims that should accompany the rulings by the Kaliningrad Regional Court of Arbitration, which arrived in Kalev via the lower-level Tallinn City Court.
"It is therefore impossible to assess whether the claims are justified, and what possible financial effect they will have on Kalev," the company said.
Kalev's board said the claims might be connected with a payment with the Kaliningrad confectionary.
Last year Kalev supplied raw material and packaging to Torgovyi Dom Pribaltiiski Konditer so the company could make specified products on behalf of Kalev. The Russian confectionary assumed the obligation of paying Kalev for the materials supplied in return for output payment.
Toward the end of 2003, differences emerged between the companies as Torgovyi Dom Pribaltiskii Konditer failed to meet its obligations and Kalev suspended output payments.
