Former Enefit Green CEO among suspects in buyback insider information leak case
The Central Criminal Police suspects insider information was leaked and traded during Enefit Green's takeover bid, generating €130,000 in illegal profits.
On Tuesday, the Central Criminal Police filed charges against three individuals and one company for insider trading, and against one individual for disclosing insider information. The suspicions concern stock market transactions made before the announcement of Enefit Green's takeover bid.
The Central Criminal Police confirmed to ERR that one of the suspects is former Enefit Green CEO Aavo Kärmas.
ERR first called Kärmas at around 1 p.m. on Tuesday to request a comment but he did not answer that or any subsequent calls. When ERR published his name with police approval before 5 p.m., Kärmas returned the call.
Kärmas said that at the time of the transaction, he had been away from the company for a year. When asked if he had bought shares before the announcement of the delisting, Kärmas replied in the affirmative.
"I did buy shares, but I had no inside information. My conscience is clear," Kärmas said.
The Financial Supervision Authority filed the initial criminal report and police are now investigating whether the suspects obtained inside information about the takeover bid and whether the leaked details allowed them to carry out illegal, highly profitable transactions on the Nasdaq Tallinn Exchange before the announcement was made public.
According to preliminary suspicions, the transactions may have generated €130,000 in illegal income.
In connection with the charges, police conducted procedural actions on Tuesday at Eesti Energia's headquarters and at locations linked to the suspects. The suspects were questioned, but no one was detained.
Among those charged are no members of the management or supervisory boards of Enefit Green or its parent company Eesti Energia. Neither Enefit Green nor Eesti Energia as companies have been charged.
The Central Criminal Police confirmed to daily Eesti Ekspress (link in Estonian) that the company facing suspicion is Glassinvest OÜ, and that a charge has also been filed against Glassinvest board member Rain Luik.
Glassinvest is owned by Piret Pärna, who is Elering's renewable energy product manager and has previously served on a committee evaluating reverse auction bids. According to police, Pärna is not currently facing any allegations.
Business daily Äripäev previously reported that Glassinvest purchased 35,000 shares in March. The company had not held any Enefit Green shares prior to that. In March, Äripäev reported (link in Estonian) that Glassinvest had been buying shares for the past two months, accumulating a total of 61,057 Enefit Green shares during that period.
Ivo Raudheiding, head of the Central Criminal Police's Bureau of Economic Crime, said the stock market must be fair and that suspicions of misuse must be investigated. If confirmed, it would mean that someone unfairly profited from state funds through the share buyback.
"While cases of abuse of trust have been uncovered on major global stock markets, in Estonia this type of crime is rare," Raudheiding said.
The investigation is being carried out by the Central Criminal Police's Bureau of Economic Crime under the leadership of the Prosecutor General's Office, in cooperation with the Financial Supervision Authority.
Eesti Energia's voluntary takeover bid for Enefit Green shareholders concluded in mid-May this year. Shareholders were offered the opportunity to sell Enefit Green shares at €3.40 per share.
The aim of the takeover bid was to bring Enefit Green back into 100 percent ownership of Eesti Energia.
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Editor: Karin Koppel, Marcus Turovski, Aili Vahtla. Michael Cole
