National Audit Office: KredEx crisis loans applicants were generally treated equally, but refusals were not properly explained

Priit Simson | 6/21/2021 | 11:00 AM

Text size: [-A] [+A]

Language: EST | RUS | ENG


TALLINN, June 21, 2021 - The National Audit Office did not identify any cases of unequal treatment of applicants at the distribution of KredEx crisis loans for nationally important projects, but points out that the refusals to lend were not properly explained and the practice of proving non-receipt of bank loans was not consistent. In addition, the Finance Committee found some justifications of loans granted questionable. 

Thus, at KredEx, there was no agreement on the eligibility of Porto Franco and Nordica, for example, as in the case of Porto Franco the extended Finance Committee raised questions about the eligibility of the measure and in the case of Nordica the Committee considered the loan to be of too high risk. However, these loan projects were approved by the KredEx Supervisory Board.

In the opinion of the National Audit Office, the work organization of KredEx had created preconditions for equal treatment of loan applicants in collecting the information necessary for loan decisions, and in the main aspects of loan applications the foundation followed its internal procedures. Despite the fact that the terms of the loan measure were changed several times during 2020, the processing of applications submitted under the same conditions was broadly the same. 

The problem appeared to be the irregular practice of proving the non-receipt of loans from banks and the processing of loan applications that did not have required annexes. The audit revealed that companies have proven their non-receipt of loans from banks - one of the important preconditions for getting a KredEx loan - in different ways. Alexela Varahaldus submitted negative decisions received from five banks while Nordica submitted only one. "As some enterprises started collecting banks' assessments only after the application was submitted, it seems that this precondition became more of a formality," the Auditor General Janar Holm assessed. 

The National Audit Office finds that in the interests of transparency of proceedings, the principles of administrative procedure must be complied with when allocating public funds. This means that refusals to lend need to be explained in detail. Due to non-compliance with the conditions of the measure, KredEx rejected the applications of four enterprises, in the amount of 112 million euros. The enterprises were informed of the rejection only by e-mail, and no proper administrative deed was prepared, which otherwise would have shown, for example, considerations as to why the project was not nationally important, what conditions the enterprise or project did not meet and how to challenge the decision.

The terms and conditions of the loan measure required an analysis of socio-economic impact, which was intended to best assess the national importance of the project. "Unfortunately, the level of detail of the analyses accepted by KredEx was different, although the socio-economic impact analysis is the tool that best helps assess the national importance of the project," said Auditor General Janar Holm.

The NAO points out that the loan was generally secured by a mortgage, but Magnetic MRO loan of 10 million euros is secured by a commercial pledge on the enterprise’s assets and a guarantee from the parent company. Nordica's 8 million euro loan is secured only by a commercial pledge. The National Audit Office points out that KredEx experts themselves have assessed the risk level of a commercial pledge being high.


In 2020, a total of 15 applications from 13 enterprises in the amount of 538 million euros were received for the loan measure for nationally important projects. The applications were processed by the KredEx Foundation, but the Government made decisions on the national importance of the projects. Five enterprises received loans in the amount of 208.4 million euros - AS Tallink Grupp (100 million), Alexela Varahalduse AS (51 million), Porto Franco OÜ (39.4 million), Magnetic MRO AS (10 million) and Nordic Aviation Group AS (8 million). Thus, 79% of the contract budget was used. The Government also provided a positive preliminary assessment for the national importance of the project by Sinrob OÜ in the amount of 14 million euros, which is planned to be processed by the end of 2021 within the framework of other crisis measures of KredEx.

The loan measure for nationally important projects was one of the measures initiated by the Government in the spring of 2020 to mitigate the economic impacts of the Corona pandemic. The measure had a budget of 265 million euros and ended on 31 December 2020. The National Audit Office analysed the application procedure at the KredEx level and assessed whether the organization of work helped ensure equal treatment of applicants and transparency of the procedure. The NAO did not analyse what could have influenced decisions outside KredEx.


Priit Simson
Head of Communications of the National Audit Office of Estonia
+372 640 0102
+372 5615 0280
[email protected]
[email protected]

  • Posted: 6/21/2021 11:00 AM
  • Last Update: 6/21/2021 10:54 AM
  • Last Review: 6/21/2021 10:54 AM

According to National Audit Office, refusals to lend need to be explained in detail.

Andras Kralla/Äripäev/Scanpix Baltics

Additional Materials


More News