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Criminal process launched for possible criminal violations at Riga Freeport

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUState Police’s Economic Crimes Combating Office has decided to launch a criminal process in regards to possible criminal violations at Riga Freeport, as reported by State Police.

Previously police launched an inspection based on conclusions made by State Audit. Now police have decided to assess conditions mentioned in SA’s report as part of a criminal process. At the moment the criminal process is classified in accordance with ‘Criminal acts performed in a national institution’, State Police explain.

Currently there are no suspects.

This is the second criminal process launched in regards to possible violations uncovered at Riga Freeport.

As previously reported, SA discovered during an inspection that the management of Riga Freeport had wasted financial resources worth at least EUR 611,888 by outsourcing services normally performed by the freeport’s management board.

The audit helped uncover additional losses related to construction of a warehouse. In 2009, the Krievu Island infrastructure development project developed by Riga Freeport’s board was accepted. In 2011, the entrepreneur was issued a construction permit to commence construction. SA believes officials of Riga Freeport board had failed to perform their duty in accordance with regulations and allowed the construction of an unrelated object belonging to a completely different owner on the same territory.

In order to realize the project, it was necessary to clear the territory by means of relocating the already constructed object – an open-type warehouse – some place else. This process cost Riga Freeport board the loss of EUR 1,012,467.

Additional costs also appeared after Riga Freeport board signed a contract with credit institutions, which agreed to help finance the relocation of port infrastructure to Krievu Island from the city centre and provide the freeport’s board a loan of EUR 80.2 million.

Upon noticing divergence from the project’s original goals and not receiving the necessary information from Riga Freeport’s board in regards to the situation, Transport Ministry asked the State Treasury not to perform the declaration of the requested payment until the freeport’s board submitted a risk assessment and future action plan for the project.

The creditor announced the halt of funding to the freeport’s board, adding that officials failed to provide information on the progress of the project. In accordance with the loan contract, construction schedule and completion terms are an important part of the loan contract. With that, any failure to comply with the construction schedule can serve as reason for refusal of payment of the agreed upon loan amount and contract termination.

Upon receiving information about the progress made in the aforementioned project’s realization, the creditor reached an agreement with Riga Freeport board in regards to the restoration of funding under the condition that the management board pays the creditor a one-time payment of EUR 120,300 for the restoration of the loan.

SA believes that by failing to perform its duties in accordance with legislative regulations, the board of Riga Freeport caused additional losses worth EUR 120,300.

Ref: 102.109.109.6780


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