Updated: A company partly owned by Kaja Kallas’s husband continues to do business with Russia

Stark Logistics, a transport company partly owned by the Estonian prime minister Kaja Kallas’s husband Arvo Hallik, has continued to do business with Russia during the war in Ukraine – despite the prime minister’s criticism of companies doing business with Russia.

The Estonian Public Broadcasting reported on 23 August that Stark Logistics, partly owned by Kallas’s husband Arvo Hallik, has not ceased operations with Russia.

Kristjan Laag, the CEO of Stark Logistics, told the outlet that the company “had practically stopped transporting to Russia, but had not completely ceased operations”, adding that the “current few runs are the last loads”.

The company had continued shipments to Russia throughout the war in Ukraine that started on 24 February 2022. Publicly available records show that the firm partly owned by the prime minister’s husband has arranged shipments worth at least $17 million to Russia during the war, the Estonian newspaper Eesti Päevaleht reported. The company earned €1.1 million from its Russian shipments in 2022 and nearly €475,000 euros this year. In total, the company has earned about €1.5 million from these shipments, according to data published in Eesti Päevaleht.

Ever since the war, Kallas has told the Estonian as well as the international media that “there must be no business with Russia”.

At a government press conference on 21 April 2022, Kallas spoke about the ban on Russian artists entering the country and expanded on the issue. “In war, everything is very black and white and clearly you must choose sides. Most businesses, event organisers and municipalities have a moral or ethical compass in place, so they don’t organise such events, they understand that,” she said.

The Estonian prime minister has a clear link to her husband’s business interests, since her declaration of economic interests, made in public in June, revealed that she had lent €350,000 to Arvo Hallik’s company Novaria Consult that owns 24.8 per cent of Stark Logistics.

Kaja Kallas at a NATO summit in Madrid, 30 June 2022. Photo by Stenbock House.

The Estonian Public Broadcasting wrote that it also forwarded a request for comment to Kallas via the government’s communications office early on 22 August, but by lunchtime, 23 August, more than a day later, there was no reply.

In the afternoon of 23 August, Kallas commented on the issue on her social media page.

“Today, [the public broadcaster] ERR published a news article claiming that a company linked to my husband was doing business in Russia. I want to emphasise that my husband does not have clients who are entrepreneurs of the Russian Federation,” Kallas wrote on social media.

“I remain of the view that all trade and business with Russia must cease for as long as the Russian invasion of Ukraine continues. My husband has a stake in a logistics company. He has explained that this company is helping end the production activities of one of its Estonian clients in Russia in accordance with laws and sanctions. All more detailed questions must be directed at these companies,” Kallas said.

Isamaa chairman: If claims prove true, Estonian PM’s behaviour is hypocritical

Urmas Reinsalu, the chairman of the opposition centre-right Isamaa party and a former foreign minister, said that should statements made in the media that a company, which the husband of Kaja Kallas has a stake in, has continued to transport goods to Russia throughout the war be proven true, then the prime minister is behaving hypocritically.

“Estonia has stood for a strong sanctions policy internationally. Now the media claims that a company with the participation of the prime minister’s spouse is continuing to transport goods to Russia during a genocidal war. Moreover, the prime minister has personally credited the holding company, which is a shareholder in the company, with a large amount. Should what have been presented in the media be true, then the prime minister is behaving blatantly hypocritically. This brings shame to Estonia,” Reinsalu said, as reported by BNS.

“What would be our reaction if such information was received about the head of government of another European country? The prime minister herself has said that we are in a war. Doing business with Russia with the personal connection of the head of the government is a betrayal of the principles that we protect by supporting Ukraine. The issue is not about legality, but ethics on the part of the head of government, who has called on the whole world to end the bloody business in Russia,” Reinsalu noted.

The Isamaa chairman stressed that the prime minister must immediately give an explanation about the information presented.

“What makes this scandal particularly foul is the fact that, during the government before last, Isamaa proposed to the government to end trade with Russia and to cooperate with the Baltic states. The prime minister of Ukraine personally asked me to do this last March. Then the prime minister of Estonia and her party did not support this proposal,” Reinsalu, who was the Estonian foreign minister at the time, added.

Urmas Reinsalu, a member of the Estonian parliament and a former foreign minister.

The opposition Estonian Conservative People’s Party’s (known also for its acronym, EKRE) deputy chair Mart Helme told the Estonian newspaper Postimees that Kaja Kallas should “definitely” resign from the position of prime minister in a situation where the media is accusing her spouse of doing business with Russia.

“Kaja Kallas has been telling us for over a year how there must be zero tolerance for the violation of sanctions. But now it turns out how her own husband and, through him, the prime minister herself are participating in the evasion of sanctions,” Helme said.

“If Kallas remains in office in September, the anti-corruption select committee of the Estonian parliament will definitely take up the matter and we will also enlist the help of competent lawyers. Kaja Kallas has been accusing others for over a year, but now it turns out that she herself is guilty of what is causing her to point the finger at others. Such double standards cannot be tolerated in the Republic of Estonia,” Helme added.

Kallas’s coalition partners also uneasy about the affair

Raimond Kaljulaid, an MP of the Social Democrats that belongs to the coalition government with Kaja Kallad-led Reform Party, said on social media that “this news could very well become the biggest scandal of Kaja Kallas’s political career, and it could also be her undoing as prime minister”.

“The news of the business activities of the prime minister’s husband in Russia raises a series of very uncomfortable questions. The main reason for Kallas’s popularity over the past year and a half and the Reform Party’s strong electoral performance (the party won the general election in March 2023, with 37 seats in the 101-strong parliament – editor) has been precisely her clear and unequivocal positions on Russia’s aggression against Ukraine,” he said.

Raimond Kaljulaid, an Estonian MP (Social Democrats). Photo courtesy of Raimond Kaljulaid’s Facebook page.

Kaljulaid added that Kallas has unequivocally positioned herself as a politician who is against everything that Russia stands for: war, corruption, the political culture there, but also business nihilism. “Russia is bad, and everything to do with Russia is bad. The fact that the prime minister’s husband has all this time had a stake in a transport company that carries out transports in Russia, and has continued to do so even after the full-scale invasion and up to the present day, does not really fit in with this narrative.”

“Internationally, too, the cornerstone of Kallas’s fame and image is her very firm and eloquent rhetoric towards Russia. The spokesperson for the Russian foreign minister, Maria Zahkharova, will now be able to look wide-eyed and ask: ‘You mean the Estonian prime minister Kaja Kallas, whose husband has certain business interests here in Russia? I don’t understand why she is so critical of Russia. It is all very well for her family to make money here’,” Kaljulaid concluded.

Kallas: my husband has done nothing unethical

At the government press briefing on 24 August, Kallas reiterated that in her opinion, her husband has done nothing unethical in the context of business related to Russia.

“I’ve always tried to keep my work and family life separate, but now they have come together, or rather, a question has arisen about the activities of my husband’s business partner. But let’s take a look at this story. The truth is that I am married, happily married, to Arvo Hallik. However, I do not have any insight into his business activities,” Kallas said, according to BNS.

The Estonian prime minister Kaja Kallas at the government press conference on 24 August 2023. Photo by Stenbock House.

“It is also true that my husband has a minority stake in a logistics company. That was all the information I had on the subject until the beginning of this week. When the media turned to me with questions, of course, I also asked my husband these questions. As he said, one of the company’s business lines before the war was also the provision of logistics services in Russia, which was discontinued back in March 2022 due to the start of the hostilities,” the prime minister explained. 

“As my husband has confirmed, they are providing the service to only one Estonian company, and this project, too, is in the phase of discontinuation. Thus, this company has not violated the sanctions imposed on Russia, nor the unwritten rules,” said Kallas.

“According to my husband, they even have a rule in-house that when they do this haulage, they are not even allowed to fill up with fuel in Russia, so that not a single euro, dollar or ruble is left in Russia,” Kallas said.

She said that she could not be asked about the business decisions of these private companies.

“I’m not personally involved in the work of these companies. What you can ask me, however, is about the ethicality of the actions of these companies. I remain of the view that all business with Russia must stop as long as the Russian aggression in Ukraine continues. And as far as I know, that’s what my husband did a month after the war started,” said Kallas.

“I’ve said before, and I stand by it, that our companies should find their moral compass and refuse deals that would somehow help the Russian war machine,” Kallas said, adding that she has nothing to hide and hasn’t hidden anything. “But I cannot be informed about the activities of my husband’s business partners,” she said.

Estonian president awaiting explanations from PM

Commenting on the scandal over the Russia-related business of the Estonian prime minister Kaja Kallas’ husband, the country’s president Alar Karis said that he is “not yet in a position” to assess the matter, but the premier should explain things more than she has done to date, the Estonian newspaper Postimees reported. 

Responding to questions from journalists, the president said that society expects explanations from the prime minister and once they are given, he needs to think and consult with advisers about what happens next.

Alar Karis at a Council of Europe summit on 17 May 2023. Photo by the Estonian President’s Office.

Karis also said that he cannot judge the seriousness of the accusations made against the prime minister, but he would expect the prime minister to speak more about the subject than she has done so far.

When a journalist asked Karis what the president thinks of the opinions expressed in the media that the scandal has damaged Estonia’s international credibility, Karis said such elements do exist in what has happened. 

Karis added that we are seeing more and more cases where the sanctions do not work, including in Estonia. These cases must be made public, because, if we have agreed on sanctions, we must make them work, otherwise we are making fools of ourselves, he said.

Read also: Polls: Estonian prime minister Kaja Kallas should resign

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