Companies may contend with moderate risks when venturing into Estonia’s public procurement sector. Instances of favoritism by public officials are not uncommon due to the small size of Estonia’s business and commercial community (GCR 2017-2018, ICS 2017). Diversion of public funds is seen as fairly uncommon (GCR 2017-2018). About a third of companies indicate that they perceive corruption as common in public procurement processes managed by national, regional, and local authorities (Flash Eurobarometer 2017). Also about a third of surveyed companies believe that corruption has prevented them from winning a contract (Flash Eurobarometer 2017). Other corruption risks in procurement include conflict of interest in the evaluation of bids, collusive bidding and tailor-made specifications for particular companies, but it should be noted that within the European Union, Estonian companies perceive these practices to be less common than most of their European peers (Flash Eurobarometer 2017). The Public Procurement State Register provides online procurement services, such as a company registration and management portal; the service has reportedly increased transparency (EUACR 2014). Companies are, nonetheless, recommended to use a specialized public procurement due diligence tool to mitigate the corruption risks related to public procurement in Estonia.
Some of the main problems with public procurement identified by the Estonian Public Procurement and State Aid Department are failure to organize procurement procedures, using preconditions without prior publication of contract notice, and using award criteria designed to limit the number of tenderers (EPPSAD, Jun. 2017). Opentender’s data set shows that a large share of tenders only receive a single bid, and tenders are frequently advertised for only a short period of time (Opentender 2017).
In a foreign bribery corruption case, investigations launched in Latvia into the alleged bribery of the former head of state rail company LDz, Ugis Magonis. The case also revealed the involvement of one of Estonia’s richest businessman, Oleg Ossinovski. Latvia’s Corruption Prevention and Combating Bureau (KNAB) reports that Magonis accepted a bribe of EUR 500,000 from Ossinovski in return for winning a tender to supply four diesel locomotives. Ossinovski will stand trial in Estonia in 2018 (ERR News, Jan. 2018).