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Wednesday 08.04.2020 | Name days: Dana, Dans, Danute, Edgars

State company may take over Ventspils Freeport authority’s duties before year’s end

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Ventspils Freeport, work group, Saeima, Cabinet of Ministers, sanctions, USA, OFAC

Latvia’s Transport Minister Tâlis Linkaits

The newly-formed state company may take over the duties of Ventspils Freeport authority before the end of the year, says Latvia’s Transport Minister Tālis Linkaits.

He mentioned that different proposals are in the works for amendments to the Law on Ports to help form a new capital association in parallel to the existing Ventspils Freeport authority. This state company may take over relations with cooperation partners, tenants, as well as perform all associated transactions.

The minister said the new structure will take over the duties and functions of the port’s authority. When asked if it is clear how the process might progress further, Linkaits notes that more options will be discussed soon.

The politician stressed that processes are performed in parallel to one another – on 17 December the government will decide about the capital association’s foundation and discuss amendments to the Law on Ports.

If the Saeima approves amendments and they come to force, there will be legal foundation for «the capital association to take Ventspils Freeport authority’s place».

Additionally, Latvian institutions have commenced talks with USA about possible solutions to have sanctions the US Department of Treasury Office of Foreign Asset Control (OFAC) has adopted against Ventspils Freeport.

Foreign Affairs Minister Edgars Rinkēvičs, who also works in Prime Minister Krišjānis Kariņš’s composed work group to ensure uninterrupted function for Ventspils Freeport, wrote on his Twitter profile on Sunday, 15 December, that Latvia’s diplomatic service actively works with the US government to release Ventspils Freeport from the list of sanctions. ‘This is taking place in parallel to internal processes in Latvia,’ notes the minister.

If Ventspils Freeport authority is not removed from the list of sanctions by 8 January, banks will no longer service payments to anyone who works with it, including shipping companies that use port services. Continued cooperation will also threaten with secondary sanctions or other limitations from OFAC.

When asked if changes could be accomplished by 8 January, the Transport Minister said ‘we have no other options’.

We have to do everything not by 8 January but 1 January, because there are many tenants and agents who have signed contracts dating with 1 January. This is why we have to do all this in time, the minister stresses.

Read also: US sanctions will not affect companies in which Lembergs no longer has any influence

As it is known, on 12 December, Latvia’s prime minister formed a work group to ensure undisturbed operations for Ventspils Freeport. The work group is led by Linkaits and includes Rinkēvičs, Finance Minister Jānis Reirs, Justice Minister Jānis Bordāns, Economy Minister Ralfs Nemiro, Environment Protection and Regional Development Minister Juris Pūce and Agriculture Minister Kaspars Gerhards.

During the first meeting members of the group discussed the situation and came to the conclusion that the Saeima’s approved amendments to the Law on Ports are not enough to ensure state take-over of Riga and Ventspils ports.

This is why the work group decided to submit to the 17 December meeting of the Cabinet of Ministers proposals for the foundation of a new work company and have it perform the functions of Ventspils Freeport authority. The state will be the owner of the new capital association. No technical details about the proposal’s practical implementation are revealed at this time.

«We are in a situation when we have 30 days to secure successful economic operations within Ventspils Freeport’s territory and we will do all that is necessary to ensure companies have a new legal person to sign business deals with,» said the minister after a meeting of the work group.

He added that it is currently unknown who could take on management of the new capital association. According to the minister, the new company’s management principle will be similar to the existing one – the council will include representatives delegated by four ministers.

When asked if it is planned to replace Ventspils Freeport authority in the new capital association, Linkaits explained the situation is similar to insolvency situation. He mentioned Parex Bank’s take-over, when the ‘good bank’ was given all the good assets.

«In this case there will be a good port management that will be in charge of all necessary assets,» added the minister, mentioning business contracts, investment contracts and others as examples of good assets.

On Monday, 9 December, US Department of Treasury Office for Foreign Asset Control, based on the so-called Magnitsky law, established sanctions against a number of private persons and their organizations in Europe, Asia and Latin America. Aivars Lembergs is among those people.

OFAC has issued a Global Magnitsky General License Nr.1, which allows for limiting transactions performed by Ventspils Freeport Authority, Ventspils Development Agency, Business Development Association and Latvian Transit Business Association for 30 days.

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