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Saturday 04.04.2020 | Name days: Valda, Herta, Ārvalda, Ārvalds

Nano-water scheme’s participant involved in another Rīgas satiksme criminal case

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUIn October the prosecutor’s office submitted to court a criminal case in which four people are accused of defrauding EUR 800,000 from Rīgas satiksme in different washing chemical procurements in 2013 and 2014. However, investigators are still interested in the company – police suspect the company of foul play in procurements.

A new criminal process has been launched, as reported by TV3 programme Nekā personīga. According to the programme, one of the two people involved in the case is Vjačeslavs Stunžāns. The ex-RS employee was a key person in the infamous nano-water scandal. In 2015, when it was revealed that regular water was supplied to RS instead of the promised chemicals, it became clear this scheme took place thanks to the company’s flawed procurement system. Neither the management of RS nor its shareholder Nils Ušakovs wanted to admit the problems and change the procurement order.

Police visited RS offices on Vestienas Street and Imanta Bus Park at the beginning of October. Investigators searched for proof in a criminal case regarding major fraud. Police suspect RS may have experienced illegalities during procurements of bus and trolleybus washing substances again. The damages caused to the state reach EUR 100,000.

«A criminal process was separated from the so-called none-water case in May. This was done because new conditions were uncovered during the investigation. This case is also connected to the washing substances supply contracts, but only with different conditions,» said deputy chief of State Police Economic Crimes Enforcement Department Ilze Sokolovska.

In the first criminal case, the company paid for washing substances that were never delivered. According to information from the programme, police has started investigating possible rigged procurements – when a specific company wins and supplies goods for inflated prices.

There are no suspects at the moment. Nevertheless, there are two people involved in the process with the status of persons eligible for defence. The programme is aware that one of them is former RS employee Vjačeslavs Stunžāns. He and three others are the accused in the nano-water criminal case. Stunžāns remained an employee of RS until December 2017. Investigators do not reveal what his role could have been in procurements.

Stunžāns was one of the key figures in the scheme involving so-called nano-water cleaning substances, which was revealed at the beginning of 2015. RS had hired a company that did not have the promised goods on hand. What was supplied turned out to be regular water. To hide this fact, organizers forged documents and labels. The scheme came to light when one of the participants decided to request State Revenue Service to repay VAT. SRS, however, found that no business deals had even taken place. In the two years this scheme was active, RS suffered losses worth EUR 834,000.

This kind of scheme would not have been possible if RS had a functional procurement system. The company does not organize open procurements. Instead, heads of the company’s offices pick three firms that submit offers to RS procurements commission. The commission does not look into procurements all that much and usually picks a winner based on some criteria. Problems with this system have existed since 2015. For whatever reason, however, RS has not changed a thing. Now this system has attracted the attention of a prosecutor, the programme reports.

«After going through the company’s internal workings a conclusion was made that there is no compliance with good management principles, jurisdiction of European Court of Justice and Latvian court of law. This is why a decision has been made to issue a warning to the company and set a term in which the company is to fix its internal order,» said prosecutor Dainis Šteinbergs.

RS was expected to have done that by the end of October. But RS has performed only insignificant improvements. For example, RS now has to check if applicant companies have any tax debts and if it is still on the list of VAT payers.

RS believes everything is fine with the procurements organized until now. Nevertheless, fraud cases are also sometimes found in strictly regulated procurements, as well. Long after the nano-water scandal RS claimed there was no fraud. An internal investigation revealed no signs of violations. The company still has not applied for a compensation of the lost EUR 800,000 from the accused. Problems in the company go largely ignored by the Mayor of Riga Nils Ušakovs.

«First of all, in this situation it is necessary to look at every case individually. As for the warning – it has been accepted. Regarding what happened a couple of weeks before elections, it is hard for me to comment if there had been any violations and what it was all about. We will wait for statements from police. We cannot say if one crime or another had taken place there, nor can we say anything for certain without a ruling from a court of law. I cannot comment or evaluate such categories, but it is clear that every time a procurement is organized it is supervised by authorities. Experience shows that nearly every procurement is appealed in the end. This is the way it is for us and every other industry. Every procurement is checked with assistance from the Procurement Monitoring Bureau. With that, it is unlikely there aren’t many systemic problems,» he comments.

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