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Sunday 19.11.2017 | Name days: Liza, Līze, Elizabete, Betija

State Audit doubts LDz’s charity activities

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Results of one of State Audit revisions remained without public attention, which is a shame. The institutions checked how the Transport Ministry orders around at the state owned Latvijas dzelzceļš (LDz). The company’s charity and advertisement contracts turned out to be especially suspicious, de facto programme of LTV reports.

Suspicion was mainly ticked because the advertisement procurement process is being carried out in an uncontrolled manner. LDz’s understanding of advertisement and charity is rather blurry. Furthermore, the criteria that govern the company’s choice of which sports clubs to fund are unclear as well. All this creates suspicion that the company’s advertisement funds are “blown” in the general direction of specific political “winds”.

The State Audit has investigated LDz’s charity and advertisement contracts starting from 2009 to the middle of 2012. Results of the survey are not revealed, however, because the information is secret.

It became known to de facto that amounts of money that were being allocated to sponsoring over the years, have decreased significantly – in 2009, the concern gave away 2.3 million LVL; in 2011, however, LDz donated only 93 thousand LVL. This year, LDz donated 250 thousand LVL.

One of the reasons for the reduction of funding for charity could be that any donation over 1 000 LVL needs to be coordinated with the Finance Ministry, de facto assumes. However, advertisement contracts do not need to be coordinated with the ministry. On top of that, LDz marked those documents secret and does not plan to publish them.

The State Audit also concluded that advertisement contract sums grew as rapidly as sponsoring expenses decreased. 74% of all investigated advertisement contracts are related to sports – this raises suspicion that those are not advertisement contracts, but funding of sports clubs.

LDz management does not deny this possibility. “If I believe that my advertisement should be printed on the t-shirts of VEF sports team and the Finance Ministry says “no”, I am still right if don’t violate the law. If I believe this is what we need – then this is what we need,” – claims Magonis.

LDz is sponsoring the aforementioned sports club for several years. In March 2012, LDz signed a contract with the sports club for 200 thousand LVL.

The State Audit has found several interesting contracts with Dinamo Riga regarding advertisement and charity. For example, LDz Infrastruktūra noted the purchase of four platinum subscriptions to hockey games as a form of donation. This cost the concern 8.4 thousand LVL. It is highly unlikely that a subscription that allows visiting hockey games for free and taking drinks, snacks and souvenirs can be considered a donation. The State Audit also discovered that rent of a balcony at Arena Riga was also registered as an advertisement contract, which cost 120 thousand LVL. The contract states that the advertisement poster must not exceed 20 x 30 cm and must be located near the balcony.

To the question on whether the company’s reputation really needs a whole balcony, Magonis replied “of course”. “Where do we invite a person? Just sit him down on the tribunes?” – he asks rhetorically.

Furthermore, Magonis does not deny that not every advertisement contract can be measured in numbers. In LDz’s case, advertisement is not likely to immediately contribute to the growth of demand on the company’s services.


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