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Wednesday 22.01.2020 | Name days: Austris

Rail Baltica employees: the project is in critical state due to poor management

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Karolis Sankovskis,  Rail Baltica, RB Rail, Transport Ministry, Tālis Linkaits	The Rail Baltica railway project is in a critical state due to poor corporate management and conflict of interests, as outlined by 62 employees of AS RB Rail joint Baltic company in a public statement.

«In spite of major progress accomplished in the project, we are very worried that Rail Baltica, which is generously co-financed by the European Union, has ended up in a critical state because of poor corporate management and conflict of interests,» the statement mentions.

Employees say that on 30 October, following the CEO stepping down, they sent a joint statement to offices of the three Baltic prime ministers and transport ministries, requesting immediate action because the CEO’s and technical director’s sudden departure, which is the fifth replacement of the high-rank officials in the past 14 months, makes them question the quality of the project’s organization.

«This is why he sent this letter and why we are now publishing the previous statement from employees. We believe residents of the three Baltic States deserve to know this. We also believe Baltic prime ministers will address this situation during next week’s trilateral meeting,» the statement mentions.

RB Rail employees propose submitting supervision over the project to prime ministers, stressing that the current fractured state of supervision does not provide for efficient implementation and coordination of the project between public and private sector’s structures on a national and regional level, nor does it contribute to inter-industrial synergy.

Employees believe it is immediately important to return to the initial view for joint company Rail Baltica as an integrated, unified structure responsible for implementation of Rail Baltica project, because currently, according to employees, there is no single organization responsible for this project’s successful implementation.

They also propose electing an independent joint-company council to ensure teams represent interests of all shareholders. This will help prevent conflicts of interest and possible intervening with decision-making.

Employees also propose immediate dismissal of RB Rail supervisory council chairman Karolis Sankovski, «considering his inability to comply with good corporate management principles and prevent major and ruinous fluctuations on the highest level of corporate management. There is also the matter of the clear conflict of interests he demonstrated across his entire term.»

RB Rail employees want a single new supervisory council member to represent the interests of the joint company’s employees.

Read also: Rail Baltica airport station’s construction may cost 250 – 280 million euros for Latvia

Employees also want council members to explain how the new temporary CEO of RB Rail meets the criteria outlined in the shareholders agreement: the CEO is required to be internationally experienced business manager and a knowledgeable expert in infrastructure construction, financing and management affairs. Additionally, employees want to know how the new CEO plans to prevent a conflict of interests if he still works in the organization that had previously supervised RB Rail.

«We believe it is in the interest of the project’s successful implementation to unite the strengths of all Baltic States before construction can commence. Now is the time for parliaments, governments and the European Commission to ask the question if Rail Baltica is a project that can provide long-term benefits for Baltic States and the entire European Union or if the countries continue fighting against inefficiency, conflicts of interest and irresponsible attitude towards EU and other countries» finances,’ the statement mentions.

RB Rail employees are committed to continue actively helping to reform and improve the management of Rail Baltica project and its implementation.

Meanwhile, Latvian Transport Minister Tālis Linkaits mentioned in the statement made to the media that the project is on the list of priorities for Latvia and all efforts are put in to finish the project within established terms. Currently Rail Baltica route in Latvia is undergoing design and construction. Construction work will become apparent to residents in Riga’s centre in the second half of 2020 and at the airport in 2021.

«The project’s implementation is a priority not only for the Latvian government but also for the EU transport policy,»

said the minister, adding that one of the transport ministry’s main objectives is coordinating and supervising Rail Baltica project, performing cooperation of all involved sides, as well as assisting with preparation of necessary documents.

As previously reported, after the decision of RB Rail board chairman Timo Riihimäki to step down in December, SIA Eiropas dzelzceļa līnijas Development and Communication Department director Agnis Driksna was picked as the temporary CEO of RB Rail. His term will begin 2 December 2019.

RB Rail’s chief technical director and board member Mart Nielsen has also stepped down. He will leave the company on 23 December. He will be replaced by Kaido Zimmermann.

RB Rail is a joint Estonian, Latvia and Lithuanian company founded specifically for the implementation of Rail Baltica project – the first infrastructure project of such a scale in the Baltic region. RB Rail is the central coordinator of the project.

More on this topic: Rail Baltica: In rebuilding of Riga Central Station deadlines and quality are key


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