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Suspicious over cartel agreement, KNAB searches construction company Merks

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU

On Tuesday, 3 September, Latvia’s Corruption Prevention and Combating Bureau (KNAB) performed investigative activities at construction company SIA Merks, as confirmed by the company’s representative Jānis Lievītis.

«We can confirm that representatives of state institutions arrived at Merks office and are currently speaking with board chairman Oskars Ozoliņš. Because their conversation is still going, we cannot say more on this topic,» said Lievītis.

No one has contacted Merks parent company – Estonian Merko Ehitus, according to what Merko Ehitus head of communications Merita Kullasepa told BNS news agency.

In the morning of Tuesday, 3 September, Latvia’s Corruption Prevention and Combating Bureau (KNAB) commenced searches at multiple Latvian construction companies and offices of certain state officials, according to information from LETA.

According to unofficial information, searches are being performed at more than a dozen construction companies over their possible involvement in a cartel agreement.

One of the construction companies in KNAB’s sights is ReRe Group, as confirmed by ReRe Group board chairman Guntis Āboltiņš-Āboliņš.

«Yes, I can confirm that KNAB officers are currently in the building performing their work, asking questions. They have not asked any questions to me, so I don’t know what they are after,» he said.

KNAB reports that the bureau, together with Competition Council, is performing court-sanctioned investigative activities. Such activities are being performed based on suspicions about the possible involvement of ten largest construction companies in illegal activities and violations of the Law on Competition.

KNAB commenced a criminal process on bribery and abuse of official power on 19 September 2018.

Competition Council has commenced an investigation of a possible violation of the Law on Competition – involvement in in a cartel agreement.

Facts held by KNAB prove possible bribe-giving and bribe-acceptance for possible coordination of prices in procurements. There is also information that points to bribery of officials in exchange for assistance with realization of interests of businessmen with matters not associated with procurements.

Crimes in question were committed between the beginning of 2015 and the middle of 2018. The possible bribe amounts range between EUR 25 000 and several hundred thousand euros.

KNAB has reasons to believe no less than ten of Latvia’s largest construction companies are involved in criminal activities.

At the same time, KNAB has acquired information in the criminal process that points to possible signs of a prohibited agreement among the largest construction companies.

Facts uncovered by KNAB in the pre-trial investigation have been sent to Competition Council, which, after analyzing said information and suspicions regarding possible breach of Section 11 of the Law on Competition, commenced an investigation. To ensure efficient acquisition of evidence in both processes initiated by the two institutions, Competition Council has commenced searches at ten construction companies together with KNAB.

Information held by Competition Council shows that construction companies involved in the process may have coordinated their activities for several years and had agreed among themselves on market division and participation in public and private procurements in both Riga and Latvia’s regions. Cartel agreements are considered the most severe violation of competition rights, KNAB reports.

KNAB and Competition Council will perform independent investigations of this within the limits of their competence.

Competition Council and KNAB are grateful to Latvian State Police Economic Crimes Enforcement Office for their support in the investigation.

Active investigation continues in the criminal process. KNAB promises to provide more detailed information once it is safe to do.

Competition Council notes that an inspection is one of the first steps taken after commencement of a case. Its goal is gathering evidence regarding companies’ involvement in the aforementioned breach of the law. The council reminds that an inspection alone does not prove the inspected company’s guilt.

Chief of KNAB Jēkabs Straume says that corruption risks are traditionally the highest in industries where public procurements are performed, especially if big money is involved.

Major procurements have a considerable effect on national economy, and it is necessary to do everything possible to ensure state and municipal procurements are carried out correctly, fairly and that the best possible offer wins, not the one with shady backing.

Studies show that corruption causes Latvia damages worth several billion euros every year.

«If it is truly important for us to see our country develop, to ensure there is sufficient money for doctors, teachers, pensions, social benefits, road maintenance, as well as secure fair competition and entrepreneurship, then now is the time to act. I want to personally invite everyone to become involved and do what they can to enhance the country’s and every resident’s welfare and report corruptive activities to KNAB,» Straume urges.


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  1. LH says:

    Literally the only news from LV are either related to money laundering or corruption and alike. Slap in the face of all normal hard working people.

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