Management of bankrupt ERA Bank under investigation

The Baltic Times, TALLINN
Mar 16, 2000
By Kairi Kurm

 Three managers of the bankrupt ERA Bank were arrested on March 7 and held for 48 hours in connection with a criminal investigation related to the bankruptcy of the ERA Bank. ERA Bank went bankrupt in April last year. The arrest was initiated by the application of the bankruptcy trustees of ERA Bank and Polaris Insurance, the subsidiary of ERA Bank.

The majority shareholder, Andres Bergmann, former board chairman Jaak Kiiker and finance director Peep Akkel were arrested under a code dealing with embezzlement on a large scale through misappropriation or squandering. According to this law, the suspects can be sentenced from three to eight years in prison.

“The suspects are released now. The police is doing its job,” said Urmas Tross, bankruptcy trustee of ERA Bank.

The police wanted to hold the bankers for a six month investigation, but the court turned down the application, ruling that the suspects would do no harm to the investigation. The suspects also promised not to leave their residences.

The troubles of the bankrupt ERA Bank started with its establishment in 1991, when the value of initial contributions was overestimated.

“The biggest problem in the bank was the artificially increased asset side in the balance sheet, which did not bring the inflow of liquid assets. Accounting can no more be objective in this case,” said Tross. “The loans were not paid back. One of the managers (Peep Akkel) dealing with the bank’s finances used the bank’s money without the knowledge of others,” said Tross.

The managers of ERA Bank also used the money to buying personal things like alcohol, pet food, clothes and watches. “As I mentioned at the meeting of creditors, the use of the bank’s assets has not caused any difficulties to the bank,” said Tross.

ERA Bank has credit claims worth of 361 million kroons and assets for 120 million kroons. The bank has 1,079 creditors and Tross believes about one third of the credits will be paid back.

“It depends much on how the companies related to Andres Bergmann will pay back their debts,� said Tross.

According to Tross, all three suspects claimed innocence.

Source:  http://www.baltictimes.com/news/articles/1095/

Media companies planning to unify Estonian tabloids

The Baltic Times, TALLINN
Mar 16, 2000
By Kairi Kurm

 Two Estonian media companies, Ekspress Grupp (Express Group) and Eesti Meedia (Estonian Media), are planning to merge the tabloids Ohtuleht and Sonumileht in order to cut costs on publishing. The management of the two media concerns announced the decision on March 10. The parties hope to launch a concrete plan by July 1.

The publication of Ohtuleht and Sonumileht together brought 35 million kroons ($2.3 million) loss to the media concerns last year. According to Gunnar Kobin, chairman of the board at Ekspress Group, the two media companies are now planing to get rid of that loss. The cooperation between two rival companies helps to reduce management, printing, distribution and financial costs, as well as to save on marketing and administrative costs. One of the new joint ventures will be established for publishing and the other one for editing the new publication.

“It is too early to predict the circulation for the new joint newspaper, because we do not know whether we want two newspapers or one,” said Kobin.

Although the circulation of Ohtuleht is bigger than the circulation of Sonumileht, the share of both parties in the new joint venture will be 50/50. The circulation of Ohtuleht is about 44, 000 copies a week, while Sonumileht publishes 30,000 copies.

Both companies have been controlled by Scandinavian media corporations since 1998, when Estonian Media was taken over by Norway’s Schibsted and Swedish Bonnier acquired half of the shares of Ekspress Grupp. The other half of Ekspress Grupp belongs to an Estonian businessman Hans H. Luik. According to the dailyEesti Paevaleht the initiative to unify two tabloids came from Schibsted.

Although the possibility of the tabloids’ unification was discussed for more than half a year, the news came as a surprise to the employees of both tabloids.

The two media companies may also decide to combine some of the competing publications or terminate the production of similar publications. According to the management of both media concerns, the daily Eesti Paevaleht and Postimees will not be unified. Postimees with its 60,000 copies a week is the most popular newspaper in Estonia. The circulation of Eesti Paevaleht is 40,000 copies a week.

Estonian Media is the publisher of the leading Estonian daily Postimees, the tabloid Sonumileht, five local newspapers and magazines. Estonian Media also owns a majority share in a printing shop Kroonpress and two distribution companies.

Ekspress Grupp publishes the daily Eesti Paevaleht, the tabloid Ohtuleht, the weekly Eesti Ekspress and several magazines. Ekspress Grupp owns the Kroontrukk printing office.

Ekspress Grupp received a 48.7-million kroon loss last year, while Estonian Media ended the year with a 5-million kroon profit thanks to the sale of the Plusspunkt newsstand chain.

Source:  http://www.baltictimes.com/news/articles/1089/