bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Sunday 15.12.2019 | Name days: Jana, Johanna, Hanna
LatviaLatvia

Curious career zigzags. From shipping schemes to a warm seat in Latvian Railway

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU

Edvīns Bērziņš

Shadow of doubt over fraud worth five million euros. Career twists with Lembergs’ approval. Secret peace treaty following Uldis Augulis’ entry to Transport Ministry. Illegal state of monopoly in the industry. What hides behind Latvian Railway chief’s «spotless» reputation?

Complaints, litigations and breached EU directive

Edvīns Bērziņš because chairman of LDz at the end of February 2016. The main commitment and priority outlined at the time was the following – ensure full compliance of the company’s operations with EU directives and amendments to the Law on Railway. This applies to matters associated with tariffs and proposals regarding infrastructure fees. Review and expansion of domestic transports is also a major issue, comments one of the members of the Nomination Commission Džineta Innusa when Edvīns Bērziņš was approved in his post.

However, Bērziņš’s objective got stuck as the years went by. Market’s opening for free competition has not been accomplished. Instead there are several ongoing litigations and Competition Council’s initiated case against LDz and LDz Cargo’s possible abuse of dominant market position. Twelve years after railway freight market’s opening in the EU, Latvia still has not done it. This means the country has breached European Commission’s directive.

Latvian State Railway Administration’s director Juris Iesalnieks had previously voiced concerns and a warning that Latvia’s failed tasks could result is serious consequences from the European Commission. Transport companies working in this sector have a great many complaints towards the policy employed by LDz. The head of LDz Edvīns Bērziņš has yet to react to any of them, however.

There are still some unanswered questions when it comes to Bērziņš’s approval. First and foremost – why was management over a company whose operations are associated with state security interests entrusted to a person with such serious problems with reputation?

Officials responsible for his approval had no way of not knowing that the ex-board member of Latvian Shipping Company and its Legal Affairs Office Edvīns Bērziņš along with several other private and legal persons is accused of defrauding approximately five million US dollars from Liberia-based Latvian Shipping Company’s subsidiary Latmar Holdings Corporation. London Court of Law had previously made a verdict not in Bērziņš’s favour, whereas Jurmala Court of Justice, which had received the case in 2013, ruled that Bērziņš needs to pay Latmar GBP 145 000 to cover legal costs for court proceedings in a foreign country. On top of that, the litigation process passed with the usual occupation breach. According to materials of the case, Latvian Shipping Company had used fake consultation contracts with «letterbox companies» that provided no consultations in reality. Part of the money was transferred before the contract was even signed. On top of that, one of Latvian Shipping Company’s «consultants» – Media Locus – was represented by infamous and money laundering schemes-involved Lana Zamba. It is unlikely that Edvīns Bērziņš, who was in control of all contracts, was unaware of getting involved in a fraudulent scheme. It is also unlikely the people who had approved him for the post were unaware as well. This begs the question – who benefited from it?

Aivars Lembergs’ ever-present shadow

It was during this fraud scandal Latvian Shipping Company was still controlled by the so-called Camp Lembergs. Austrian Arindal Beteiligungsverwaltungs GMBH, one of the letterbox firms involved in Latmar fraud scandal, which had also received five payments USD 960 000 each, was 100% owned by Jakobs Hiršbeks, who is mentioned as the trustee behind trusts of suspended Ventspils Mayor Aivars Lembergs’ family. An interesting pattern is outlined – nearly five millions were flushed from Lembergs’ controlled Latvian Shipping Company to a letterbox firm owned by Lembergs’ trustee while the person who later became chief of Latvian Railway with Lembergs’ blessing was holding his hand on the pulse of the entire business operation. This cannot be the only interesting coincidence, can it?

The previous chief of LDz, Ugis Magonis, was detailed in August 2015 by Corruption Prevention and Combating Bureau. Anrijs Matīss was Latvia’s transport minister. Aivars Strakša briefly became acting chief of LDz. There were almost no doubts he would become the next head of the company. In February 2016, however, Uldis Augulis became transport minister, and the situation changed. The ministry ended up under the Union of Greens and Farmers. According to unofficial information, the interests of a certain Aivars Lembergs had largely dictated the rules there, and so Edvīns Bērziņš was appointed as the next chief of LDz around the end of February. Around the same time, peace was signed in secret with Latmar in the fraud scandal.

Tax fraud does not affect reputation

During Augulis’ term as transport minister, Lembergs’ associate Verners Lūsis because LDz chief of logistics. Polish authorities accuse Verners Lūsis of defrauding more than 48 million in a VAT fraud scheme. Lūsis has been associated with Lembergs since 2005, when he because a board member in then Lembergs’ controlled AS Ventbunkers. It is well-known that in the same year, the two of them had engaged in no-so-legal talks in Copenhagen, and the entire conversation was recorded by Latvia’s Constitution Protection Bureau with assistance from Danish authorities. The recording was added to Lembergs’ criminal case.

Verners Lūsis’ name is also mentioned in relation to LDz odd reputation. After his detainment in Lithuania, Lūsis stepped down from his post as chief of logistics of LDz, saying that he made this decision to preserve the company’s reputation. However, almost immediately after that, Lūsis was given a job in LDz subsidiary LDz Cargo with a wage of EUR 3 500 with Bērziņš’s blessing. The initiative to put Lūsis as board chairman of LDz logistics came from Edvīns Bērziņš’s side. On top of that, Bērziņš was the one who insisted on Lūsis’ remainder at LDz Cargo. It would seem that LDz chairman is not the least bit concerned about Lūsis’ reputation problems and possible problems for the company.

A million here and a million there…

There is another confusing link between LDz and Ventspils – the grandiose promotion and sponsoring contracts, which could not have been signed without Edvīns Bērziņš’s direct approval. LDz considers information about promotional contracts a company secret, which makes full information about them inaccessible. The promotional contracts in question were the reason why Latvia’s Transport Minister Tālis Linkaits finally declared no-confidence towards the board of LDz. The minister concluded that many of the company’s signed promotional and marketing contracts had no ties with the company’s actual operations.

Information has also surfaced that corruptive actions had taken place in relation to LDz Cargo’s owned rolling stock, which may have involved fraud.

There is also the failure to build the sound-dampening wall at Šķirotava Station, which LDz had decided to build without organizing a tender six years ago. LDz had transferred an advance payment of half a million euros to Composite Construction. The company then transferred the money to two Hong Kong-based companies, and that was the end of it. Now there is no money or a wall. The only problem is that LDz was ordered to return EU co-financing. The deal went through when Edvīns Bērziņš was still board chairman and Uģis Magonis was in charge of LDz. But why did LDz need four years to take notice of the situation and ask about money recovery options only after Composite Constructions was declared insolvent? The half a million euros was long gone by then, and now it is not possible to recover this money. One of the versions is that LDz started worrying after such a long period of time to so that certain officials would not be made accountable.

The attack by Lembergs’ owned media

It should be clear by now that Latvia’s transport minister had ample reasons to distrust the board of LDz. However, his initially burning activity towards enforcement of corruption and scheming has calmed down. It is not impossible that his may be related to the massive smearing campaign launched by media owned by Aivars Lembers. Newspapers like Neatkarīgā Rīta Avīze and Ventas Balss, whose opinions more often than not are the same as Lembergs’ opinion, do not report the dubious business operations by LDz and the general actions against the interest of businesses associated with the transport industry, but they do actively slam Lembergs’ biggest opponent Dr. Rudolf Meroni, accusing him of all sorts of crimes. However, drowning Ventspils Port’s transit companies using LDz would mean drowning Ventspils along with them. This is because these companies provide the city a great deal of revenue with their taxes. For example, AS Baltijas ekspresis was the biggest PIT payer per employee in Ventspils in 2018. Unfortunately, it seems that LDz and its subsidiary LDz Cargo are doing all they can to reduce this company’s competitiveness. Looks like this state company, which uses its subsidiary to engage in railway freight operations (even though it is not allowed to as the company in charge of railway infrastructure maintenance) cannot possibly accept that LDz Cargo’s market share may drop from 70% to a mere 66% and the market share of AS Baltijas ekspresis might increase from 14% to 22%. However, it is likely that this is one of the reasons for the company’s currently observed hysteria.


Leave a reply

Week in Lithuania: Conscription age lowered, Klaipėda port’s development plan approved, retail tax delayed

Last week, in Lithuania, the key news stories were the lowering of the national conscription age, the approval of the development plan of the Klaipėda port and the delay of the real estate tax.

BNN summary of the week: end of Lembergs Era? New governor for Bank of Latvia; fight for Riga City Council

The overthrowing of the «old league» in Latvia has caused a domino effect. The most notable event to have taken place this week is the addition of Aivars Lembergs and four of the associations he has influence over to the list of sanctioned persons USA. This has shaken up the established order in Ventspils and Latvia.

Aivars Lembergs leaves his post in Latvian Olympic Committee

On Friday, 13 December, individual member of Latvian Olympic Committee and member of its Executive Committee Aivars Lembergs announced to LOK board his decision to leave the organization, BNN was told by LOK press-secretary Mārtiņš Mālmeisters.

Ralfs Kļaviņš and Edvīns Bērziņš leave the board of Latvian Transit Business Association

Chairman of Riga Commercial Port Ralfs Kļaviņš and ex-chairman of Latvian Railway Edvīns Bērziņš have left the board of Latvian Transit Business Association, according to information from Firmas.lv.

US sanctions will not affect companies in which Lembergs no longer has any influence

The sanctions introduced by USA against Lembergs will not affect the companies over which he no longer has control thanks to a ruling of the court.

Liquidation of discount fares on multiple RMS routes would help save money for Rīgas satiksme

By liquidating multiple discounts for passenger fares on multiple LLC Rīgas mikroautobusu satiksme routes, LLC Rīgas satiksme public transport company hopes to save approximately EUR 1.75 million a year.

Tallinn region GDP portion decreases in Estonian economy

In 2018, 65% of the Estonian gross value added was created in Harju county, while the rest of the country is inching closed with Harju county, the official statistics of the Baltic country showed.

EU prolongs targeted sanctions against Russia over Ukraine

The European Union has extended for another six months its sanctions against Russia’s energy, finance and military sectors. The continued restrictive measures are said to remain in full until Minsk peace deal is implemented.

Local government representatives will no longer work at Riga and Ventspils freeport

Following the coming into force of amendments to the Law on Ports, representatives of Riga City Council and Ventspils City Council will lose their respective posts in the board of Riga Freeport and Ventspils Freeport, the law states.

Total tax debts in Latvia at December’s beginning – EUR 869.4 million

At the beginning of December, total tax debts in Latvia, including outstanding, halted and extended debts, were equal to EUR 869.367 million, which is 1.9% less than a month prior, according to data from the State Revenue Service.

In UK’s Brexit election, Conservatives win comfortable majority

In the British snap parliamentary election aimed at breaking the Brexit impasse, the ruling Conservative Party has won gaining a comfortable majority, according to close to complete results.

Riga City Council’s interim administration may be entrusted to VARAM state secretary Balševics

If the Saeima votes in favour of dismissing Riga City Council, the interim municipal administration may be entrusted to Environment Protection and Regional Ministry’s state secretary Edvīns Balševics, according to the ministry’s Riga City Council dismissal legislative draft to be decided on by the government on 17 December.

EU member states commit to 2050 carbon neutrality, Poland opts out

European Union’s 26 members, including the Baltic states, have supported the planned political course to considerably reduce the greenhouse gas emissions to net-zero by 2050. Coal-powered Poland said it could not reach the goal and opted out.

Latvia’s prime minister forms a work group to ensure Ventspils Freeport’s operations

On Thursday, 12 December, Latvia’s Prime Minister Krišjānis Kariņš has issued an order on formation of a work group under Transport Minister Tālis Linkaits in order to ensure undisrupted operations at Ventspils Freeport, as reported by the prime minister’s press-secretary Sandris Sabajevs.

Ministry: to prevent damaging Latvian sports sector’s reputation, Lembergs should leave LOK

To avoid letting US sanctions negatively affect Latvian Olympic Committee and spread to the reputation of the country’s sports sector, the ministry can only ask Aivars Lembergs step down as member of LOK Executive Committee, BNN was told by Education and Science Ministry.

Budget Committee declines residents’ request to postpone increasing funding for parties

Saeima’s Budget and Finance Committee has rejected a public initiative signed by more than 11 000 residents. This initiative requested postponing the planned increase of funding for political parties.

Lower election threshold in Lithuania – more democracy or chaos?

The Lithuanian legislature, Seimas, has lowered this week the parliamentary election threshold to 3 per cent for political parties and 5 per cent for coalitions.

Russia expels German diplomats, retaliating to German step over Berlin murder

Russia has asked two diplomats of the German Embassy to leave the country. This is a tit-for-tat measure after Germany declared two Russian diplomats personae non grata as Berlin investigates an international murder in the German capital, TASS reported.

Riga Freeport and Liepaja Special Economic Zone to leave LTAB

Riga Freeport and Liepaja Special Economic Zone will leave Latvian Transit Business Association managed by Aivars Lembergs, as both are subjected to US sanctions.

Lembergs’ influence over Ventspils Freeport needs to end, bank supervisors say

The goal of the US sanctions is reducing Aivars Lembergs’ economic and political influence over Ventspils Freeport and other companies under his control. Sanctions are not meant to paralyse companies, rather seeing how they are used to process deals influenced by the person under sanctions – Aivars Lembergs, said Finance and Capital Market Commission head Santa Purgaile during a press-conference on Thursday, 12 December.

USD 25 million offered in Weinstein sage to 30 alleged sexual abuse victims

In the U.S. movie industry scandal surrounding sexual abuse claims against film producer Harvey Weinstein his lawyers have offered a USD 25-million settlement to more than 30 women, The Guardian reports.

Legal Affairs Committee supports lifting judge immunity for administrative violation cases

Saeima’s Legal Affairs Committee supported prior to the second reading legislative drafts to the Law on Judicial Power and Law on Judges Disciplinary Liability intended to lift the immunity of judges in administrative violation cases, as confirmed by Justice Ministry.

Estonian-Finnish gas interconnection unveiled

Estonia and Finland have held ceremonies to unveil the gas pipeline Balticconnector, built to connect the gas transmission networks of both countries separated by the Baltic Sea.

Mārtiņš Kazāks officially becomes governor of the Bank of Latvia

On Thursday, 12 December, Latvia’s Saeima officially approved Mārtiņš Kazāks as the new governor of the Bank of Latvia, as BNN was told by Saeima’s press-service.

What is Ventspils Development Agency and what will its members do now?

Among the organizations against which US Department of Treasury Office for Foreign Asset Control has adopted sanctions is also Ventspils Development Agency. In accordance with OFAC issued Global Magnitsky General Licence Nr.1, global partners have 30 days to cease all cooperation with this organization.


Do NOT follow this link or you will be banned from the site!