Latvian State Audit has uncovered not only violations, but also lack of professionalism in the realization of Krievu Island infrastructure project. As a result of these problems, Riga Freeport has experienced additional costs worth more than EUR 3 million.
In addition, the goal defined in the application for the provision of EU funding has not been achieved, specifically the full relocation of port activities from the city centre. This only creates EU co-funding correction risks up to 100% of the allocated EUR 77.2 million. That would mean massive loses for Riga Freeport. It is highly possible that the Freeport will not be able to cover such an amount on its own and may be necessary to tap into taxpayers’ money, State Audit notes. It was uncovered during the audit that this risk will remain up until 2019, when the European Commission plans to carry out an evaluation of overall accomplishment of goals and justifications of costs.
State Auditor Elita Krumina notes that: «In total, having looked at the overall progress with Krievu Island project, it is hard to avoid drawing parallels with stereotypes about students who prepare for final exams the day prior. Krievu Island project has been in the hands of Riga Freeport management since 2006, when the decision was first made to use Krievu Island for port needs. It was originally planned to complete the construction phase of the project by the end of 2012. Unfortunately, the progress of the project remained slow and largely unprofessional all until 2014.»
Construction project’s supervisor was only attracted at the end of 2013 following pressure from Finance Ministry, Transport Ministry and the public. Before then, the project’s management team consisted of former and standing politicians without necessary qualifications to handle projects of this scope.
The project’s realization and construction work was commenced before agreements were reached with all sides participating in the project, specifically stevedore companies. All this resulted in massive costs that could have been avoided through proper communication.
In spite of already made decisions in regards to the project’s development, the management of Riga Freeport has allowed one of the port’s companies to build a warehouse on the territory originally intended for the needs of Krievu Island project. This caused losses worth more than EUR 1 million.
SA uncovered violations in the most recent audit and in previous ones. Violations cover a wide range. Among them are violations of rights, unjustified and illegal procurements, prohibited donations in large amounts, unjustified administrative and other costs worth several million euros. Unfortunately, institutions responsible for monitoring Riga Freeport management’s activities have not been all that active in responses to uncovered violations.