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Ceturtdiena 02.04.2020 | Name days: Imgarde, Irmgarde

Train has left the station. Latvian Railway loses board chairman and board member

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LDz board chairman Edvīns Bērziņš (L) and LDz board member Aivars Strakšas

The council of Latvian Railway (LDz) has agreed to terminate work relations with the company’s board chairman Edvīns Bērziņš and board member Aivars Strakšas, as journalists were told by LDz Council chairman Jānis Lange.

The two aforementioned officials decided to leave their posts of their own accord. Officially they will cease being members of the board with 12 August. Ēriks Šmuksts and Ainis Stūrmanis will continue working in the company’s board.

«Considering that a situation has formed when there is no active dialogue between the heads of the company, the ministry  and the company’s board, the decision has been made to put an end to this uncertainty and start moving forward,» Lange said after a meeting of LDz council.

He added that freight turnover has gone down in the past several months, and that a longer period of uncertainty would only affect indexes further.

Lange said the council’s goal is representing the interests of the shareholder, which in this case is the Latvian state.

«And it is in the interests of the state to secure stable and development-aimed function of LDz. If this uncertainty is allowed to continue for a long time, it could negatively affect the company’s development and cause considerable damage for LDz and the entire industry. Today’s decisions made by the council in regards to the agreement and approval of temporary board members is intended to prevent these negative consequences,» explained Lange.

When asked if Bērziņš and Strakšas were asked to leave, Lange replied evasively, saying that such an agreement was reached after a long period of negotiations.

When asked what will happen with Stūrmanis, who has also received no-confidence from Transport Minister Tālis Linkaits, Lange said right now it is important to ensure continuity of the company’s business activities. This is why an agreement has been reached in regards to the two remaining board members, specifically that they will remain in their posts.

When asked if the company’s council agrees with or denies Linkaits’ criticisms and violations the board members, according to the minister, had committed, Lange said: «We do not have any accurate information, but I can confirm that the audit will continue.»

Lange said two audits are underway at the moment. «The media audit could be ready in the next couple of weeks, whereas the function audit – within the next four months,» said the council chairman.

Lange thanked the company’s management for their work. «Last year’s results were very good. The set financial objectives were met and exceeded. The company’s council, shareholder and Cross-Sectoral Coordination Centre all welcomed this,» said Lange.

He added that the council’s main task for LDz board is stabilizing freight turnover and working on reassessing the company’s business model. Lange stressed that the decline of freight turnover has been significant in recent months, and that it is necessary to look for ways to stabilize the situation.

He also said that LDz council intends to organize a personnel selection process to pick new board members. It is planned to hire a professional personnel selection company for this.

«We are patriots of LDz and the entire industry. We put the interests of the state, Latvian railroad workers and LDz above our professional ambitions. This decision was made to find an exit from the crisis that started in May as soon as possible. We do want LDz to maintain its financial stability and contribute the same or even more to Latvia’s national economy as we have been since 2016,» said Bērziņš.

The LDz council has also appointed two temporary board members – Māris Kleinbergs and Andris Lubāns. LDz reports that until now Kleinbergs has been board chairman and CEO of SIA Schenker. In the past he was board chairman of Latvian Post, as well as the director in transport and logistics company Baltic Logistic Solutions, logistics director in Avers Centre, and chief of Latvian Branch of transport and logistics firm Kuehne&Nagel Latvija.

Until now, Lubāns has served as board chairman and secretary general at Latvian international road carriers Latvijas Auto, has been in charge of Riga City Council’s Transport Department directors office. Between 2014 and 2017 he was board chairman in Pasažieru vilciens, and between 2012 and 2014 he was in charge of Transport Ministry’s Road Traffic Department.

LDz press-service has told mass media that since 2016, when the company’s board was first assembled in its current form, the company’s economic indexes have improved considerably. 2018 was the year when the company reached its best result of the past three things. Evaluation and change of the company’s business and organizational processes, together with increase productivity of its employees and improved cooperation with existing and new partners, the company’s board has helped improve the company’s economic indexes, as mentioned in the company’s statement.

LDz reports that the net turnover reached EUR 365 million in 2018, which is 14.5% more than when compared to 2017. LDz profit reached EUR 14.4 million in 2018. This allowed the company to pay EUR 102 million in taxes and duties, which is 7% higher than a year prior. The company’s productivity reached 51 126 euros per employee in 2018, which is approximately 19% more when compared to 2017.

In the first half-year of 2019, LDz concern’s non-consolidated profit reached EUR 8.9 million, which is 1.9 times more than the budget’s planned profit margin.

As previously reported, on 7 May Linkaits voiced no-confidence to Bērziņš, Strakšas and Stūrmanis. He asked the LDz council to dismiss the three officials. Stūrmanis remains in his post.

The minister stressed that the main points of criticism are associated with possible distortion of competition, which threatens with serious consequences for LDz and the country.

The ministry received information about possible corruption. This information was later forwarded to Corruption Prevention and Combating Bureau (KNAB). Multiple financially large economic transactions, including marketing and advertisement contracts worth several million euros were found, which leads to believe the board has not acted as a serious and careful manager.

LDz board members announced that Linkaits’ statements about the company’s management were aimed at preparing the company for privatization. Bērziņš and Strakšas also asked State Police to commence a criminal process against Linkaits for defamation.

«By spreading baseless and declarative statements lacking any base and providing intentional and insulting statements, Linkaits undermines the reputation of LDz management and the entire company. He also creates suspicion in the minds of residents that myself, my colleague Aivars Strakšas and other officials mentioned by Linkaits have committed serious crimes,» explained Bērziņš.

He said he asked KNAB to provide information about any reported facts. He has also met with the institution’s leadership. «I have received strong information that KNAB has nothing to suggest I or Strakšas are involved in any corruption,» stressed Bērziņš.

LDz is a public use railway infrastructure maintenance company and the leading company of Latvian Railway concern. The company has six subsidiaries – LatRailNet, LDz Cargo, LDz Infrastructure, LDz Rolling Stock Service, LDz Security and LDz Logistics.

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