Latviski English По-русски
Ceturtdiena 24.04.2014 | Name days: Nameda, Visvaldis, Ritvaldis

How Berzins and Co privatized Lode Company. Part 5

(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUPresident of Latvia Andris Berzins ended up in the centre of public attention this week. Politologists say it was because of his odd and irresponsible behaviour. This time – how Andris Berzins and his ‘financial family’ got their hands on the privatized Lode company.

‘An interesting fact – in many of his interviews our hero often mentions his big salary (without mentioning any specific numbers, of course), working in a Swedish bank and the largest pension in Latvia that he is provided with. However, he never seems to want to mention the very business deal that made him a millionaire: the sale of Lode company in summer of 2007, when four largest shareholders sold their owned shares worth LVL 1.84 million for LVL 8.99 a piece, earning more than LVL 16.66 million as a result. Andris Berzins earned LVL 4.53 million from this. It is no surprise that there are serious reasons behind his reluctance to speak of this business deal.’ As stated in a fragment of a book by L. Lapsa, K. Jancevska and I.Saatciane ‘Latvietis parastais’ published by Pietiek portal.

‘Lode is a company with a long history – it was built in 1958 as a drainage pipe factory. In 1964, Lode launches the production of clay bricks and in 1987 – roof tiles. In 1996 Janis Slesars’ company is privatized and “a person from the outside” even becomes the holder of the controlling package of shares. This outsider is none other than Edvins Samulis, who is known to the readers of this book as one of our main hero’s long-term associates. […]

Where did he come from? By the beginning of the early ’90, Edvins Samulis, born in 1948, had already achieved much and in many different fields. Born in Gulbene and achieved higher education as economist specialising in industrial planning. He was Chairman of the Planning Committee in Cesis, then – Lode. Around 1983, he becomes Deputy Director of Latvia’s office of All-Union Institute of co-operative trade. He works in various institutions after that, until finally gaining the post in the Riga City Executive Committee, where he works under Alfreds Rubiks.

This person then wins Lode’s privatization tender in 1996 – even though there was no tender to begin with, because he was the only candidate. He promised to pay a significant amount of money for the controlling package of shares in Lode – LVL 490,000. He also promised to invest LVL 1 million in production within the following three years. He then immediately paid only LVL 49,000. The remaining amount is then promised to be paid within the next two yars – LVL 8,791 per month and LVL 2,187 in bonds every quarter (with rights to request permission to repay the remaining amount only in the form of bonds). […]

Yes, 36,547 shares bought for bonds did end up in Edvins’ ownership. But the maximum price of these shares was not set at the announced level of LVL 3-5. The price was three times lower – near LVL 1.76′. In addition to that, public date does not show Edvins selling some of his other shares to procure Lode’s controlling package of shares.

So where did he get this amount of money to perform regular privatization payments? According to Dienas Bizness – it is likely that he took a loan. It is also quite logical for him to have taken a loan in a bank in which he was once Vice-President and was responsible for the loan policy of the institution – Unibanka. However, its Governor Andris Berzins declined that his led bank could have issued any loans to the Lode project. (it should be added that this is where Andris Berzins had simply lied or had no idea what was going on in his own bank. March 12, 1996, in his letter addressed to Director of Privatization Agency, Director of Lode Janis Slesars notes: “Because Lode Company is taking a six-month loan of LVL 45,000 from Universal Bank’s Cesis Office in order to procure energy resources, we ask your permission to pledge current assets – ready-made products worth a total of LVL 120,000.”)

This is the real situation, as is Edvins Samilis secrecy in regard to this matter that made Dienas Bizness believe there is a new profession introduced in Latvia’s privatization processs – the Latvian-privatizer, whose only purpose is to officially represent the actual but anonymous investors (at the time, private persone were not usually asked to present any documents regarding the origin of their money).

Are these actual investors super-anonymous or can they be uncovered? In 1997-1998, the list of Lode’s shareholders included Unibanka’s Vice-Governor Ivars Kirsons, Andris Berzins and…Unibanka. Minutes of the company’s September 27, 1997 emergency shareholders meeting shows that Lode’s Director Janis Slesars owns only 17,290 shares, while Andris Berzins is mentioned to own 24,231 shares. According to minutes of this meeting, Unibanka already had 58,021 shares.

Two documents depicting general authorities issued on the same day – April 29, 1998 – add special flavour to this whole situation. One document depicts the authority given to the head of Unibanka’s Legal Affairs Department Armands Grinbergs ‘as shareholder to perform all necessary activities to represent the interests of Latvijas Unibanka on the April 30, 1998 shareholders meeting of Lode, including, but not only, to participate in voting and debates, offer proposals, sign important documents and publicly represent Latvijas Unibanka’. The same authority is provided to Armands Grinbergs, who was given authority to manage Andris Berzins 24,000 shares – the latter signed the necessary documents as Governor of Unibanka. [...]

In July 2003, Edvins Samulis sold Lode’s shares to then an unknown or unnamed buyer (it was would out one year later that the buyers wa Janis Slesars): he sells 9.44% of shares on July 8; 3.63% on July 25 and 5.95% of shares on July 28. Edvins Samulis number of owned shares in the company already exceeds 50% of the total shares. When Berzins left his post at Unibanka in 2004, Edvins Samulis felt a serious urge to sell 9.89% of shares (for an unknown price) and a few months later and additional amount of 12.79% of Lode’s shares. Not a single person interviewed on this matter wanted to speak of the reasons behind this decision. The third largest shareholder – Janis Slesars – is also not very talkative: he knows nothing, does not understand questions, sees no reason to meet and remembers nothing of the shareholders meetings. ‘It would be unethical against other shareholders – to speak of a company in which I do not work. I have nothing to tell you. Ask Berzins how he acquired his shares. I am a whole different person…’

In any case, in 2007, Andris Berzins and other shareholders sold Lode to foreign investors. Berzins received four and a half million for his package of shares (worth LVL 504,000). It cannot be denied that the Russian crisis had, indeed, taught our hero a couple of lessons, at least in the area of performing business operations. ‘Everything is based on trends. For example, if a bank was once in a dangerous situation, we can accurately predict the moment when it might collapse. It was the same with Lode. Such companies cannot survive within the confines of a single country if they are unable to invest further. A similar company was built on the borders of Latvia and Estonia – they would have easily taken us out within two years. So we decided to sell Lode. I was certain we were going down a hill and would soon enter free fall. We sold it in 2007. Everything had collapsed later in September – the global crisis had begun. Now people claim left and right that I had been greedy, because I earned LVL 4.5 million for that,’ – he mentioned in his interview to ‘Neatkarīgajai Rīta Avīze’ four years later.

The surplus from this business deal along with other income is also seen in the State President’s official declaration – SEB Bank bonds for EUR 327,000; EUR 2,14 million in bank; LVL 687,000 and EUR 406,000 in loans and more than 30 different real estate properties in different parts of Latvia. With that, the words of ex-banker Inesis Feiferir: ‘Yes, he took over Lode rather well..’ can be accurately supplemented with: ‘yes, and not only that,’ – as stated in the book.


Leave a reply

  1. Ilmars says:

    Berzins should be in jail and not the President of Latvia.
    Latvia is run by a never ending parade of crooks , incompetents and idiots .

    Thumb up 0 Thumb down 0

Baltic states move higher in WEF information technology ranking

In all three Baltic states, information and communications technology infrastructure and usage has improved, indicates the World Economic Forum's Global Information Technology Report published on April 22.

Seniors in Latvia save money more actively than others

Latvia’s residents have begun thinking about their financial stability more and more lately. Residents have begun making savings, diverting larger and larger amounts of money. The largest increase of savings is noted in Latgale, where residents’ savings have increased 16%.

Opinion: unfathomable how UGF could nominate Lembergs as its Prime Minister candidate

‘An experienced Latvian politician and mayor of a large city speaks of our choice to join the European Union and NATO as though one of Kremlin’s ideologists, outcompeting even Putin’s partner party Harmony Centre’s politicians in his statements,’ – said MEP and Chairman of For Fatherland and Freedom/ LNNK party Roberts Zīle in his interview to BNN.

iPad sales flatten; Apple expects boost from Microsoft software

The sales of Apple's tablet computer iPad for the first quarter of 2014 have fallen far below expectations selling 16.35 million of them, but analysts had expected about 19 million. The data indicate that Apple's iPad business has slowed to negative growth for last quarter.

150 NATO soldiers arrive in Latvia

This Thursday, April 24th, 150 NATO soldiers will arrive in Latvia to participate in military exercises in Ādaži.

Ukrainian forces regain town in east of country

Ukrainian Interior Ministry forces have pushed an illegal armed group out of Svyatohirsk in Donetsk Oblast, the Ministry has announced.

Forest industry’s exports and imports continue to grow

In the first two months of 2014, exports of Latvia’s forest industry’s sector reached EUR 324,270 million, which is 12% more than in the same period of 2013 (EUR 289,089 million), according to Agriculture Ministry’s Forest Department ‘s data.

Saeima to gather for the first spring session meeting

This Thursday, April 24th, the Saeima will gather for the first meeting in the new spring session. A total of 31 matters are on the agenda.

Contents of ‘KGB bags’ to be published after their scientific examination

Documents of the former KGB office will be made publicly available after they have been scientifically examined. The examination itself is set to be completed before May 31st, 2018. This is provided by Saeima’s recently approved amendments to appropriate laws.

Foreign policy expert: Putin’s views are short-term and reek of hooliganism

It is hard for Vladimir Putin to accept the rules of the game, which have developed over the past 20 years. While the majority of people are happy about the end of the Cold War, it was likely a personal tragedy for Putin, notes foreign policy expert, deputy Chairman of Latvian Transatlantic Organization Žaneta Ozoliņa in her interview to BNN.

Latvia’s general budget deficit drops to 1% of GDP

General government budget deficit at the end of 2013 comprised EUR 223.8 million or 1.0% of the Gross Domestic Product (GDP), and the general government debt comprised EUR 8873.3 million or 38.1% of the GDP.

Producer prices in Latvia up 0.6%

Compared to February, producer prices in industry in March 2014 decreased by 0.2%.

Shadow of corruption hovers over nearly half of all Latvian EP candidates

Corruption risks are present for nearly half of all Latvian European Parliament candidates, as reported by Society for transparency – Delna.

Cheap ‘spice’ outcompetes ecstasy pills

Last year, the volume of narcotic substances in Latvia had increased 6.5% in comparison with 2012, as reported by the head of Saeima’s Defence, Internal Affairs and Corruption Prevention Committee Ainars Latkovskis.

Maxima still feels the impact of residents’ boycott

The Zolitude tragedy, which had a big impact on Maxima network and its relations with customers and employees, has left serious and long-term consequences for the company. One of the prime examples is the residents’ boycott of the supermarket – although limited in scale, the company’s sales are already below last year’s levels.

Still no clarity on the winner of the multi-million train procurement project in Latvia

End of this week marks one month since letters with offers to Pasažieru vilciens’ multi-million train procurement project were opened. However, there is still no exact information available on the winner.

Russia could face further sanctions if it fails to defuse tensions in Ukraine

With Moscow failing to act to moderate tensions in Ukraine, Russia risks facing further sanctions, U.S. Secretary of State John Kerry has warned.

USA to send 600 soldiers to Poland and Baltic States

USA plans to send 600 soldiers to Poland and Baltic States to participate in the upcoming military exercises, as it was reported by Pentagon this week.

Road builders: bridges require a surgery, not a bandage

‘Instead of compiling a detailed support programme for Latvia’s bridges, Transport Ministry is trying to get away with cosmetic improvements with its request to allocate money from the emergency budget,’ – believes Chairman of Latvijas Ceļu būvētājs Andris Bērziņš.

BIG Bank to pay a fine of EUR 13,000 for misleading customers

Consumer Rights Protection Centre has imposed a EUR 13,000 large fine against BIG Bank for implementing misleading and substandard commercial practice.

Three persons are held suspect for causing the fire in Riga Castle

There are three prime suspects in the Riga Castle fire criminal case. All of them performed work prior to the fire and were all equally responsible for compliance with fire safety regulations in the building, reports the Chief of State Police Criminal Police Office Andrejs Grishins.

More than 5,000 children were born in Latvia in Q1 2014

In Q1 2014, 5,068 newborns were registered in the country, which is 358 babies more than in the first three months of 2013.

Latest trends in IT entrepreneurship to be reviewed in Estonia

This week in Estonia, there will be held an international IT conference on digitalised business models presenting IT best practices from various fields - agriculture, clothing industry, logistics, retail and creative industries.

NATO to carry out measures to ensure Baltic safety

This week, NATO plans to announce its future steps to increase the safety of the Baltic Sea region.

Opinion: weakening Latvia is in Putin’s interests

If there is someone who is working hard to divide the population of Ukraine, it is not someone among local Russians and Ukrainians, this task is being performed by Putin and his policy. The majority of the work aimed to divide people and pit them against each other is performed by Kremlin propaganda and information war.