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Saturday 24.08.2019 | Name days: Boļeslavs, Bērtulis
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Lithuanian Railway will not terminate contract with Sigmen

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Lithuanian state railway company Lietuvos geležinkeliai will not terminate its contract with Latvian company Sigmen, which is one of the region’s largest Russian width standard rail suppliers even though Lithuanian media had reported last month that the company is controlled by an ex-KGB officer Yuri Simonenkov, who may or may not have ties with Russia’s political leaders.

The railway company has received a response from a special government committee that checked Lithuanian strategic company’s transactions. The response mentions that the committee will not commence an investigation of transactions with Sigmen, as reported by Lietuvos geležinkeliai representative Mantas Dubauskas.

According to him, this is why it has been decided to continue the deal signed at the beginning of the year. «The operation was not halted because there was no reason for that,» he added.

Prime Minister Saulius Skvernelis’ representative Tom Beržinskas checked only planned, not already executed operations. However, Lietuvos geležinkeliai had requested to check performed operations.

In accordance with the law, inspection of business operations can be initiated by the committee, state president, government or State Security Department if it is believed they could create threats to national security.

According to Mantas Dubauskas, Lietuvos geležinkeliai had turned to the committee at the beginning of June. After that the committee had requested additional information. After assessing submitted information, the committee concluded that it would not commence an investigation.

Lithuanian railway company requested a report from the committee only after Lithuanian public media LRT research journalism office reported at the beginning of June information about business operations worth millions of euros between Lietuvos geležinkeliai and Sigmen, whose shares are owned by Simonenkov’s wife. Simonenkov, meanwhile, is reported to have ties to people close to Russian President Vladimir Putin, as well as oligarchs applied with international sanctions. This, however, does not prevent the company from participating in public procurements and other business operations in Lithuania.

Initially Dubauskas could not explain why Lietuvos geležinkeliai had not turned to law enforcement authorities and special services in relation to dealings with Sigmen even though it had in relation to business operations involving Estonian company Skinest Baltija.

He notes that the latest procurement from Sigmen was secured through a tender, and no information was received from law enforcement institutions that it could be a reason to not go through with it.

At the beginning of June, Lithuania’s Transport Ministry asked the State Security Department to assess potential risks for national security. According to then the Transport Minister Rokas Masiulis, any information regarding possible risks for the strategic company should be assessed very carefully.

The ministry notes that so far there has not been any information that would imply there are risks associated with Russian metallurgical holding Evraz and ArcelorMittal Spanish factory’s representative Sigmen and Lietuvos geležinkeliai.

The minister’s advisor Vytautė Šmaižytė could not say this week if any response from the State Security Department has been received or not.

In February, Lietuvos geležinkeliai signed a contract with Sigmen worth EUR 11.5 million for the supply of rails. As reported by LRT, over the course of ten years Lietuvos geležinkeliai and the state company’s subsidiaries have paid Sigmen nearly EUR 130 million. Sigmen strategic objective is Rail Baltica project.

According to data from Lithuania’s Public Procurement Service, Lithuanian railway company has paid the Latvia-based company nearly EUR 50 million so far. Lithuania railway company’s subsidiaries had signed contracts with Sigmen in the past: Railway Construction Centre had procured goods from Sigmen worth EUR 4.6 million in 2017. Between 2011 and 2016, the total volume of purchases made by Lithuanian state railway companies reached EUR 85 million.

Simonenkov served in Latvian SSR KGB branch together with Yevgeni Roldugin. The latter went to KGB school together with Vladimir Putin. Roldugin’s brother Sergei Rodugin is one of the closest friends of the Russian president.

Simonenkov started his business in Latvia with Skonto, which he founded together with other former KGB officers, Lithuanian journalists report.

Until 2008, when USA applied sanctions against it for money laundering, Simonenkov owned Multibanka. Additionally, until 2016 Simonenkov had a joint business with Sergei Nosov, who is one of Putin’s advisors.

In June 2018, Lithuanian government’s committee and government admitted that Lithuania railway company’s planned deal for the procurement of rails worth more than EUR 3 million with Estonian railway service and investment group Skinest Rail company Skinest Baltija does not  meet the country’s national security interests. It was then decided to sign a different contract with a different contender – Lithuanian company Swetrak.

Lithuanian government announced that Skinest Rail owner, Estonian businessman Oleg Ossinovski has ties with foreign institutions or private and legal persons, which creates increased risks for national security. On top of that, he is accused of bribery.

Information from Procurement Monitoring Bureau shows that this year Latvian Railway has signed a contract worth EUR 4.69 million with Sigmen for the supply of 6 021 tonnes of new 60 E1-type rails.

In April 2018 LDz and Sigmen signed a contract with EUR 2.766 million for the supply of rails. In March 2017, LDz signed a contract worth EUR 2.312 million with Sigmen for the supply of rails.


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