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Ceturtdiena 22.08.2019 | Name days: Rudīte, Everts
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Expert: Baltic governments should review Rail Baltica governance and implementation model

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUGovernments of Baltic States should review Rail Baltica governance and implementation models, says Vice-President of the Baltic Institute of Corporate Governance Andris Grafs.

He admits that the current situation has outlined the root of the problem – which is the governance model of RB Rail and division of responsibility in the project’s introduction process.

RB Rail shareholders – railway companies – have a dual role in Rail Baltica project. On one hand, shareholders perform objectives in accordance with the Commercial Law – they elect supervisory board that ensures oversight of the work performed by the management. On the other hand, RB Rail shareholders are also involved in the implementation of Rail Baltica project. They receive part of Rail Baltica’s funding via RB Rail. With that, RB Rail management should make sure funding is used in accordance with requirements – that to a certain extent is one of the tasks performed by company shareholders. At the same time, shareholders’ representatives – supervisory board members supervise the work performed by RB Rail management, said Grafs.

According to him, Baltic governments in cooperation with European Commission, which finances 85% of Rail Baltica project, should review the project’s governance and implementation model to ensure its successful implementation in time and accordance with the budget.

«Governments should consider ways to exclude the possibility of conflicts of interest in the project’s implementation. Because RB Rail supervisory board insures oversight of the EUR 5 billion worth project’s implementation, it is necessary to include professionals to the supervisory board – independent board members with extensive international experience in the private sector and implementation of large-scale projects,» said the expert.

He said that if Baltic governments do not review the project’s governance and implementation model, there is no reason to expect the problem to resolve itself with a new CEO.

As previously reported, on Thursday, 27 September, Baiba A. Rubesa, CEO and Chair of the Management Board of the Baltic State’s joint venture RB RAIL AS, submitted a resignation letter to the Supervisory Board of the joint venture. The resignation letter is effective immediately.

At a press conference organized on the same day, Rubesa listed a number of reasons for her decision, including the lack of unity and transparency with the project.

As she continued listing the catalysts that caused her to submit her letter of resignation, Rubesa told journalists that the project lacks proper governance model: «Everything that happens in the project is and will be delayed.»

She mentioned that even though progress has been made with coordination and approval of decisions over the course of the project, there are still questions that remain unanswered.

She also said that the next funding stage remains unclear – it is unknown how things will turn out after 2020 because the situation will likely suffer from Brexit next year. Rubesa says that the matter with Latvia’s budget is also unclear.

She stressed that countries participating in the project have failed to reach an agreement in regards to the project’s main goal – every country continues working to suit its own interests. This is an obstacle for decision-making processes, especially in regards to finances. In addition, the project lacks transparency.


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