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Saturday 22.10.2016 | Name days: Irīda, Īrisa

SA: apartment owners pay for Rīgas namu pārvaldnieks’ wastefulness and illegalities

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe justification behind building management fees established by Rīgas namu pārvaldnieks have no traceability, which makes the fees hard to compare with RNP’s actual expenses. On top of that, fees include expenses not relate to building management, as concluded by State Audit in a recent inspection.

SA urges apartment owners to use their rights provided by regulations to assess regular reports submitted by RNP on the use of the money paid to maintain their homes and compare them with work that was actually carried out by RNP and demand the return of money provided for unjustified expenses. SA notes that the work organization currently established in RNP forces residents to take the initiative to defend their interests, as RNP is incapable of doing that.

Auditors note – even though RNP uses the formula stated in regulations to calculate management costs, internal regulations are unclear and too general. This allows officials to freely interpret them, data sources, time periods and estimates included in the calculation of management costs. As a result, RNP’s calculations for 2014 are untraceable and cannot be compared with actual expenses.

Notable discrepancies have been noted in RNP’s accounting, because other expenses for economic activities, such as fees for mediation and paid service provision, are included in the basic management costs. In addition, apartment owners also paid for nearly all expenses of RNP that surfaced as a result of providing services not related to building management activities.

The management price includes not only unjustified and wasteful expenses, but also expenses auditors describe as illegal and ineffective. Auditors have found that the management costs include fees for 13 people who are possibly fictively employed. In 2014 and 2015 these people were paid more than EUR 190,000 in wages. SA has informed the prosecutor’s office of this particular violation. In addition, apartment owners also paid for generous benefits to employees which RNP paid after terminating their job contracts. There have also been cases in which benefits were paid after job contracts were terminated during inspections or multiple days after the end of inspections.

Actual costs of annual repairs and technical maintenance, as well as costs of grass-cutting services are not backed with documents that would demonstrate the extent of work carried out. On top of that, information provided in documents is controversial. For example, repairs were carried out without the use of necessary materials (a repairman managed to replace a light bulb without spending a single light bulb), work was carried out on weekends and holidays, people who are no longer RNP employees carried out work, work hours stated in work logs exceeds the time stated in work tables, etc.

It has also been concluded in SA’s report that RNP had included receipts for questionable business lunches and representation goods in building management costs. It is also possible that RNP had included receipts for fuel used by RNP employees for their personal needs. Apartment owners also had to pay for expenses unrelated to building management. Instead, these costs surfaced as a result of RNP’s indifference (fines for delayed payments). Violations revealed in the field of procurements provide for the possibility that RNP failed to find the most cost-effective and economically beneficial service provider.

Auditors turn attention to the fact that apartment owners are not provided with accurate information in regard to their savings. In the revenue/expenses report for 2014 RNP noted that a total of EUR 1.5 million had been used on prevention of emergencies. The audit, however, reveals that nearly one million euros of that amount had not been used at all. RNP explains that this money forms the fund for preventing future emergencies. Auditors believe RNP has been misleading apartment owners, because no information was provided to them in regard to the formation of this fund. In addition, RNP stated this money as used up in its report. Houses that refused to use RNP services in 2014 were never given back their savings.

Auditors also note that, like Rīgas Satiksme, RNP has signed a contract with Trade Union Coordination Centre. As part of this contract, the coordination centre represents only two trade unions – LABA and LABA RNP. It covers costs for cultural, recreational, sports and healthcare services to its members. It also allocates different benefits. Last year RNP transferred EUR 362,000 to this centre. Even though this money is not included in the building maintenance costs, SA notes that by providing additional benefits only to members of two trade unions, RNP has clearly breached the principle of prohibition of differential treatment. In addition, by not providing right to manage the use of allocated finances to the managing body, RNP has made it impossible to be certain that allocated money is truly used for goals stated by RNP. Certain concerns surface from the fact that the coordination centre had not spend EUR 121,000 in 2014 and did not mention this amount in its report for 2015, adds SA.


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