Estonia hit by money-for-residence scandal

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Estonian Prime Minister Andrus Ansip on Thursday slammed two politicians from his centre-right government camp who face claims of peddling residence permits to wealthy Russians.

Ansip condemned the "complete idiocy" of the duo, who were exposed by a television report late Wednesday.

"It is too early to say whether the activity of the two is criminal, but trading in resident permits is unethical for sure," Ansip told reporters.

Estonia's ETV public television said that member of parliament Indrek Raudne and Tallinn city councilman Nikolai Stelmach had made extra cash by organising allegedly shady permits for Russians.

The law allows foreigners to gain residence if they are on the board of an Estonian company or invest 63,000 euros ($84,000) in the country.

Former Soviet-ruled Estonia joined the European Union in 2004, meaning its residents have easy access to the 27-nation bloc.

Firms run by Raudne and Stelmach reportedly registered dozens of people from Russia and other ex-Soviet republics and 78 firms, at the same address in Tallinn.

ETV quoted sources as saying the permits were sold for 3,500-4,000 euros.

Raunde defended the practice as "just a normal business".

"Thanks to those investors, Estonia can pay salaries to teachers, increase pensions and our defence budget," Raudne told ETV.

Estonia is emerging from one of the deepest economic crises in the EU, which saw the government impose a draconian austerity drive.

Raudne and Stelmach are from the Res Publica and Pro Patria Union, the right-wing junior coalition partner of Ansip's centre-right Reform Party.

The union is known for its calls for more ethics and less corruption in politics, and a relatively strong stance of leading players towards Russia.

Ties with Moscow have been rocky since Estonia regained independence in 1991 following five decades under the Kremlin's thumb.

"We will ask both politicians for explanations. What I have heard for now from the media indicates that it's a very double-faced and ugly case," said Social Democratic lawmaker Andres Anvelt, head of parliament's anti-graft committee.

© 2011 AFP

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