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Tuesday 25.09.2018 | Name days: Rauls, Rodrigo
LatviaLatvia

Non-negotiated contracts; fictive deals: digital television introduction schemes for «mere mortals»

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The criminal process revolving around digital television project’s realization in Latvia was launched 15 years ago – in 2003. And it began with a search in a company owned by Andris Šķēle. After that, the list of involved people started expanding with names like Andrejs Ēķis, Jurģis Liepnieks and others.

BNN explains why those people were put on the bench of the accused and kinds of schemes the prosecution says were pulled off by them.

According to the prosecution, in 1995 then the chairman of LNT Andrejs Ēķis came up with the idea for the transition from analogue to digital TV (DTV) in Latvia. He know of the UK-based Kempmayer Media Limited company administered by Michael Anthony Flanagan. It was the company. Using it would assist in introducing DTV to Latvia.

According to testimonies, Liepnieks contacted Flanagan and provided him with documents relating to a company associated with him – Gedney Purcell Ventures Ltd. (Gedney). Flanagan then performed the necessary activities to make Gedney the owner of 50% of shares in KML. This made Liepnieks a secret shareholder in KML.

Testimonies provided by the prosecution mention a period from June 1999 to March 2000. In was then Māris Pauders – director general of Latvia’s State Radio and Television Centre (LSRTC) – received word of Ēķis initiative to introduce DTV. Materials of the case state that Pauders and Ēķis wanted to have KML recognized as a company that introduces DTV. In reality, however, KML would only do that fictively. Using the contract signed with KML, LSRTC would be the actual DTV initiator. Money is then transferred through KML to Ēķis and others.

LSRTC then founds AS Digitālais Latvijas radio un televīzijas centrs [Digital Latvia’s Radio and Television Centre] through which all contracts are signed. It should be said that DLRTC is not a state company. Because of that, there was no reason for owners to announce procurements of necessary equipment.

LVRTC bought DLRTC on 16 May 2000. A total of LVL 5,000 was invested in its base capital. In September 2000 LVRTC hands over 23% of LNT base capital share to DLRTC so that the company can introduce DTV. Court materials mention that in January 2001 Ēķis and Liepnieks agreed on increasing KML shareholder numbers and base capital size. As a result, eight new shareholders were registered – legal persons that had never performed any business operations prior to then and would never perform after.

According to materials of the case, in the period of time prior to February 2001, Liepnieks got Andris Šķēle to participate in the grand affair. It should be added that Šķēle is not a suspect in the criminal case – he was accepted as a witness in the so-called digitalgate. Šķēle became one of KML’s shareholders through Ratcliff Limited, which was founded by lawyer Uldis Kokins.

In 2001, Ēķis’, Liepnieks’ and Pauders’ initiative is joined by DLRTC manager Guntars Spunde. This formed a trilateral consultancy and integration services contract with DLRTC, LVRTC and KML. LVRTC also accepted DLRTC signing a consultancy services contract with BBC Technology. This contract helped provide confidence that KML is a competent partner and will introduce DTV in Latvia, according to the prosecution’s materials.

It is also reported that Kokins informed Flanagen of his plans to found KML’s subsidiary – Kempmayer Media Latvia (KMLat). Kokins gave Flanagen instructions that KML’s only form of operations would be purchasing goods from third parties and selling them to Latvian companies.

On 14 November 2002, DLRTC signs a contract worth more than LVL 30 million with KML and KMLat, as reported by Latvian media, including Delna society for openness.

In the interest of Liepnieks and other involved sides, Ēķis and Loze divide up equipment procurements and supply deals by involving fictive mediators. This also artificially inflated the costs of introducing DTV in Latvia, the prosecution states.

Jānis Svārpstons issues misleading receipts to DLRTC on behalf of KMLat; Spunde orders paying those receipts. One of the contracts was signed between Finnish Teleste Corporation and DLRTC. The contract stated that equipment would be bought through KML. Together with Jānis Zips, Svārpstons compiled the receipt and requested nearly LVL 47,000 more than what KML had paid Teleste Corporation, as stated in the prosecution’s materials.

What are the charges then?

Court ruling of 15 May 2015

A.Ēķis: accused of organizing and managing large scale fraud scheme – found guilty.

J.Liepnieks: accused of organizing and managing large scale fraud scheme, as well as money laundering – found guilty.

G.Spunde: accused of supporting and assisting with money laundering, fraud and abuse of authority – found guilty.

M.Kvēps: accused of fraud – found not guilty.

V.Purvinskis: accused of supporting and assisting in fraud scheme – found guilty.

J.Loze: accused of supporting and assisting in fraud scheme and money laundering activities – found guilty.

U.Kokins: accused of supporting and assisting in fraud scheme and money laundering – found guilty.

H.Krongorns: accused of money laundering – found guilty; accused of organizing, supporting and assisting in fraud scheme – found not guilty.

J.Svārpstons – accused of supporting and assisting in fraud scheme and money laundering – found guilty; accused of abuse and exceeding official authority – found not guilty.

J.Zips: accused of supporting and assisting in fraud scheme and money laundering – found guilty; accused of abuse of official power – found not guilty.

J.Ulmanis: accused of fraud, money laundering and abuse of power – found not guilty.

A.Zabeckis: accused of abuse of power, organizing and supporting fraud – found not guilty; accused of money laundering – found guilty.

J.Plūme: accused of supporting and assisting in fraud, as well as abuse of power – found not guilty.

A.Janevics: accused of supporting and assisting in fraud and abuse of power – found not guilty.

M.Pauders: accused of fraud and abuse of official power – relieved of criminal liability upon being found mentally ill. (Pauders has since passed away).

O.Rubenis, J.Janovs, A.Boldans: accused of negligence of duties as public officials – found guilty.

Materials of the case (which take up 800 pages) detail fictive companies and contracts. If the accused claim they are not guilty, then why did they put so much effort in creating such an enormous web of so many companies, including the giant BBC Technology?


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