Soorm and Tuvi are alleged to have accumulated €1.5m between 2010 and 2016 through what prosecutors called a “misuse of trust”.
Officials have claimed “fictitious bills” were used to legalise laundered money and that the pair acquired assets in Estonian pig producer Rakvere using “contracts with companies belonging to or affiliated with them”.
Soorm and Tuvi have been detained around 12 months after HKScan asked Estonian prosecutors to investigate if laws had been broken. This was requested after the business launched an internal inquiry in 2016 into governance practice across its Estonian, Latvian and Lithuanian operations. The investigation culminated in four people being sacked.
‘Conflict of interest’
At the time, HKScan CEO Jari Latvanen declined to comment on why the probe was opened. All he told this site was that he had “information that must be investigated”.
It led to the dismissal of four people in November 2016: Teet Soorm, Baltic country leader; Mati Tuvi, vice-president of Baltic pork primary production; Lauri Kallikom, vice-president, Baltic poultry primary production; and Hindrek Smidt, technical manager of Baltic pork primary production.
One unnamed individual was reprimanded by HKScan, but retained their job.
In a statement about the investigation in 2016, HKScan claimed some members of its Estonian management team bought products and services from companies led by members of the HKScan Baltic executive team or their close relatives.
“Supplier agreements have not been concluded in accordance with the transparency required by HKScan or general listed companies, but termination of the contractual terms has caused a clear conflict of interest between HKScan and the subcontractor,” the business said.
Commenting on the recent developments, Ülav Kalf, head of the office of the Economic Crimes Bureau, a branch of Estonia’s Central Criminal Police Department, said: “This case in a good example of how a company self-identifies violations, fixes them and cooperates with the police. Strong control over the company helps to identify well-meaning employees and reduces potential risks.”
Anne Mere, executive vice-president of the Baltics at HKScan, added: “It is important that these violations were brought to light and action were taken to ensure that they will not continue. HKScan is committed to a thorough investigation, and so we have turned to the Estonian authorities.”
HKScan said it would not comment further on the matter.