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Friday 18.08.2017 | Name days: Liene, Helēna, Elena, Ellena, Liena

Friendship with Unity – the only thing that keeps Prudentia afloat?

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Аuthor: Evija Trifanova/LETAThe income Prudentia Advisers received from the agreement with Latvia’s national airBaltic airline was the company’s only source of income last year.

This is shown by the data from Lursoft and documents in possession of Pietiek portal regarding PM Valdis Dombrovskis’ approved regular “payments” to Prudentia.

“In 2012, the company provided strategic consultations to airBaltic, offered consultations in the merging of two of Latvia’s largest dairy product processing plants (Rīgas piena kombināts and Valmieras piens) under the new brand of Food Union, as well as provided other consultations”, – said in the Prudentia Advisers management’s report about 2012.

However, according to official numbers, the money was brought to Prudentia and its owners by only one of the stated clients last year. According to the text of the contract signed with airBaltic and Prudentia Advisers at the end of 2011, the company was entitled to be paid 13 794 LVL by the airline every week.

This means that Prudentia received (or presented a bill for) a total of nearly 689 thousand LVL in 2012. This net turnover is nearly identical to Prudentia Advisers‘ official annual turnover – nearly 689 thousand LVL.

This means not only the fact that Dombrovskis’ government has been the only feeder of Prudentia, but also the fact that only because of the “friendship” provided contract nothing was achieved in favour of airBaltic – no strategic investor, no other benefits. Prudentia, on the other hand, earned 216 060 LVL of clean profits last year. It is unknown as to how this profit was divided.

Prudentia was a chosen company to resolve the problems of Parex and airBaltic, which did not turn out to be cheap. Even though it is not revealed just how much of taxpayers’ money was used on financial consultations, it is unofficially known that it cost at least half a million LVL in airBaltic‘s case. The result, however, is nothing special – airBaltic is still trying to overcome financial problems. It is ironically said that the only notable achievement of the consultants was the offer to potential investors to purchase airBaltic shares published in Financial Times not too long ago.

Now Prudentia is consulting Liepājas metalurgs (LM). The so-called LM “creditors club” – Citadele bank, Latvenergo, SEB bank and the Finance Ministry – made the decision to attract a professional financial consultant in the last week of March. A corporate agreement was reached between the creditors and Prudentia on April 2. According to this agreement, a specific reward is set for the consultant – 15 000 LVL per week, Pietiek reports.

According to LM Council members Andris Denins and Gunts Vilnis, Prudentia puts the largest obstacles in the way of saving LM.

Latvian financial consultancy market already has such internationally famous auditor companies like KPMG, Deloitee & Touch and Ernst & Young, as well as a number of others. But Prudentia is the only one to receive orders without having to participate in contests. One of the possible reasons for this is said to be the relation of Prudentia‘s owners to the ruling political party in Latvia – Unity, the portal writes.

The Finance Ministry cannot give a clear answer as to why the state is purchasing financial services without first organizing a contest. Manager of the ministry’s communication office Aleksis Jarockis merely keeps citing different sections of the Public Procurement Law or the Public Service Providers Law. These sections mention cases when the organization of a contest is unnecessary (such cases are very different and can be interpreted in many ways).

Meanwhile, economic experts note that the state should announce contests. Economist and once the director of the Latvian Economics institute Raita Karnite notes that it would be more logical for the state to organize contests and choose the most beneficial offers. Otherwise it looks more like only those who are close to the ruling party are the ones to get the bets orders.


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