One more time we have to read articles on corruption and mismanagement around Latvia and its free port.

As published on September 22nd, 2013 we read in Diena.lv, LA.lv, 10minutes.lv, labz.lv, delfi.lv, tvnet.lv and bnn-news.com the following, really worrying article:

“BATL supports the initiative to divert profits from port activities to Latvia’s state budget

The Biedrība Baltijas asociācija – Transports un loģistika (BATL) supports the initiative of the Economy Ministry to amend the current regulations to allow the transfer of a portion of Latvia’s ports’ revenue to the state budget starting January 1, 2014.

“It is not the introduction of new taxes on port Boards that will reduce the overall competitiveness of Latvia’s transit corridor but the state’s inability to prevent the arbitrariness of the management teams of Latvia’s ports, which often results in scandals, criminal accusations, irresponsible realization of investment projects and other unpleasant activities. This fact is proven with conclusions from the prosecutor’s office, Corruption Prevention and Combating Bureau, the European Commission and courts,” – as BATL informed BNN.

“We are certain that it is not possible to increase the competitiveness of Latvia’s transit corridor while the arbitrariness of Latvia’s ports still remains, allowing port Boards to freely operate state and municipal assets, not pay taxes and freely manipulate port financial resources as they see fit,” – BATL states.

BNN reports further more:

This is why BATL has decided to support the ministry’s initiative. The association believes that this step will become a signal for the improvement of Latvia’s transit corridor. BATL believes it will not only supplement the state budget but will also force members of port management Boards to seriously rethink their current lifestyle.

…”

Read also in Latvian and Russian on the BNN news portal

BNN received an e-mail the other day: “Dear Sirs! To me BNN is like a tribune. A tribune that asks the questions some influential people would rather not reveal to the general public. Some of the questions asked cover the so called “transit wars”. I am deeply concerned about the upcoming “assault” of an enterprise that so far courageously held off the “Ventspils Commandant”. I would appreciate if you would kindly publish my opinion on this matter.” BNN kindly does what our reader asks.

Some people are familiar with the classic Business capture scheme of the early 90s from detective stories, some from detective serials on TV: bulky lads in wearing sportswear persistently offered their protection services for an ungodly amount of money to an owner of a small shop, or stall. And after the debt for “security services” grew equal to the value of the enterprise altogether, the “friendly” protectors claimed ownership over it and transformed from regular criminals into – respected businessmen.

This little scheme is what comes to mind when you’re reading reports in press about probable insolvency declaration of the largest mineral fertilizer transit terminal in Europe, the second in the world – “Kālija parks”. Even though the “protectors” have long since traded in their sports trousers for some expensive suits, even though the year round revenue of the “small shop” is accounted in six digit sums, even though the scales of pulling off something like this is hardly easy; you still accurately notice that familiar pattern.

Furthermore BNN reports that:

So, the lawsuit about declaring that company insolvent came from the «ТМ Security» security firm (the same «ТМ Security» that hit the spotlight in 2010 during dramatic events around “Ventbunkers”.The ones where police were forced to neutralize a number of «ТМ Security» employees, so that the owners of “Ventbunkers” would finally be able to access their administrative building).

You’d think who cares about some dispute between some millionaires, over “who” owns “what”? So what some high ranking VIP bark on and on at each other and unleash their “hounds” with guns and lawyers with their convoluted claims? …How does this involve rest of the people in Latvia?

Let’s not haste to judge. The time to put a squeeze on “Kālija parks” couldn’t have been chosen any better. The company is now engaged in negotiations with prospective partners, and the latter may prove to be sensitive to that kind of scandals. And if the contracts are not signed – instead of a false, provocative bankruptcy, a very real bankruptcy might occur. And then, about 200 employees maintaining the terminal, employees of the businesses working in cooperation with “Kālija parks” – will end up out on the street. Consequences for Ventspils will be great, for Latvia – catastrophic.

The reputation of Latvia as a reliable transit corridor could suffer the most. A country where a small security firm can effectively paralyze the work of one of the largest enterprises in its field of business, a country where raider activity has become a profitable business, a country where bulky men in masks take active part in ownership disputes – does not sound like a good place where to start your business. Transit terminals in our neighbor countries wait in line for fertilizer supplies from Russia. And why not? Russian businessmen can choose either Lithuanian or Estonian ports for transit. The story behind the reduction of freight turnover for the last decade or so in Ventspils reflects this perfectly.

The fall of one large enterprise because of some criminal showdown can cause a chain reaction. And that would cease being a problem for one city it would become a problem for the whole country. Do the people behind the “Kālija parks” bankruptcy claims understand this? I’m sure they do, even better than we do in fact! However putting the remains of a ruined transit business in their pockets is far more profitable than letting that said business to function normally, but not under their control.

As the saying goes, I suppose, “If I don’t get some – no one does!”

P.S. on behalf of BNN: according to our internal rules, our news agency does not publish the names of the authors of the articles. The information about the author is stored in our editorial.

We can add only the fact that “Kālija parks” actively challenges the existence of any debts to both «ТМ Security» and Martins Kveps in both the Regional Court of Kurzeme and the Supreme Court of Latvia. On the 14 of December the Supreme Court of Latvia will review the claims made by “Kālija parks”. «ТМ Security» on the other hand, acting like it does not notice these claims, has initiated a case at the Regional Court of Kurzeme. It also seems that judge Lucava, even having access to the judicial system database, paid no attention to the core of the problem and initiated the “Kālija parks” insolvency process. And doing so unknowingly created an obstacle. In accordance with the Latvian legislation system an insolvency process cannot be used in a case involving debt return.

Even though the employees of «ТМ Security» joined the ranks of Zatler’s Party of Reforms, even though they claim to respect Latvian laws – reality is that «ТМ Security» shows its contempt for the law quite clearly.

The Baltic News Network published the following article on June 9th, 2011.

The Baltic Association of Transport and Logistics (BATL) warns Ventspils Free port administration’s activities against AS Ventspils Grain Terminal clearly suggest once more the changes are necessary within Ventspils Free port administration.
Kazakh investors own 100% of AS Ventspils Grain Terminal, which is a perspective project to strengthen the economic relations between Latvia and Kazakhstan. If the project was implemented successfully, it would be a signal also for other investors to place financial resources in the Latvian economy. The association agrees to Economy Minister Artis Kampars description of Ventspils Free Port activities – irresponsible, mismanaged and anti-governmental, according to BATL statement.

BATL, which is made up by the leading companies operating in Ventspils Free Port, point out they are forced to deal with the methods of its administration and its arbitrary, economically ungrounded and different decisions regarding a number of companies.

Similalry, BATL also stresses the port has turned into a private company run by a small number of individuals and its key aim is no longer to develop the port but to lobby «their» companies and harm others.

Consequently, the-once-famous free port is now lagging behind almost all ports along the eastern cost of the Baltic Sea.

Back in mid 1990s, Ventspils Free Port handled almost as much as Saint Petersburg, Tallinn, Riga, Liepaja and Klaipeda ports, while now each of these ports handles much more than Ventpils.

This clearly calls for intervention of the state, as it is a matter of the responsibility of the state and international reputation, thus, BATL will turn to the Latvian Saeima and Cabinet of Ministers asking to arrange the legislation in terms of Ventspils Free Port, according to the association.

You may read this article in the Baltic News Network in the following languages:

Latvian: BALT: Ventspils brīvostas pārvalde lobē savus uzņēmumus, nevis valsts intereses

Russian: BATL: правление Вентспилсского порта лоббирует свои интересы

English: BATL – Ventspils Free Port lobbies its companies instead of Latvia’s interests

You may read the articles in media-reading - or go to the source directly:

• Tendersinfo.com
• Zambiawatchdog
• Tizambia.org

There are several news sources which make it obviouse, that LUKOIL daughter company LITASCO has tried to influence a tender in Zambia in LITASCO's favor.

Details about black payments and corruption are still to be investigated around this case - but the articles really sound terrible.

Also in the fight between LITASCO and AS Ventbunkers there seem to have been such illegal schemes, which rerouted payments to some "other party" instead of into the bank accounts of AS Ventbunkers.

This brings a strange light on to LITASCO, an international oil trading company - which does not have much in common with western business ethics.

AS Ventbunkers

On January 28th, 2011 - the AS Ventbunkers press service published a press release about the current situation with the AS Ventbunkers client LITASCO.

As the press release expresses, the terminals of Ventbunkers are currently blocked by LITASCO. This, by not taking over their oil from the Ventbunkers terminals and thus blocking the terminals.

This situation is now ongoing since christmas last year - and costs Ventbunkers millions every day. A loss in turnover and profit which will be difficult to compensate during 2011.

The situation began, when LITASCO claimed to have paid 20 mio. US-dollars for Ventbunkers services - to unknown bank accounts. LITASCO refused to disclose where they have made the payment to. Funny.

Ventbunkers accordingly closed contracts with other customers for the future. This did not seem to have been anticipated by the LITASCO management. Now they are trying to "convince" Ventbunkers to continue, using "brute force".

As russian company .... business ehtics seem to be different still - in Russia. I would say - if you have to do business with Russians - be very very very careful.

Read the full AS Ventbunkers press release 2011-01-28

Dr. Rudolf Meroni / AS Ventbunkers

In their article published on January 30th, 2011 - Kārlis Lithens LETA and Aija Rutka LETA describe the current situation around the latvian security company "TM Security".

TM Security was involved in several fights about access to premises of AS Ventbunkers - where they claimed to be hired for security - which turned out to be untrue.

The security company's armed guards tried to prevent AS Ventbunkers officials (management board and supervisory board members) from entering their own offices (!!!). Incredible situation.

Police had to intervene, to allow the board members to enter their offices.

Swiss lawyer Dr. Rudolf Meroni - who is the chairman of the supervisory board of AS Ventbunkers explains in this article, that it is sad that police took months to verify, that the board members of AS Ventbunkers are legitimate. Meroni says, that police was just "sitting and watching".

Unbelievable situation in Latvia.

Read the full article LETA article quoting Dr. Rudolf Meroni.

It is interesting to find the new channel of AS Ventbunkers, as it gives in insight into what happens in Ventspils and the million dollar oil transit business. Rudolf Meroni seems to be the right person to put more light on this subject.

Railroad jam

Nozare.info reports on January 18, 2011 on the peculiar situation of Ventbunkers (VBU) and the Russian oil giant Lukoil.

Lukoil (or their subsidiary company Litasco) is trying to force VBU sign a new contract by failing to load the terminal stored passwords, and blocking the possibility of handling other customer load.

Rudolf Meroni (Rudolf Meroni), Ventbunkers council promises to fight it.

Read the full article at nozare.info.

Ivars Geidāns

The Baltic News Network reports in their article dated January 17,2011:

On considering the history of this project, I am rather glad than regretful that we lost the tender. It turns we had calculated the most precise and beneficial construction price for the state, when compared to the competitors’ one.

Consequently, those who now should regret something are officials and public authorities who opted for building the national library for an unreasonably high price.

You can read the full article in BNN online.

Henriks Danusevics

A BNN article from January 18, 2011: Latvia is too small for Lidl, who has other markets where to develop, the President of the Latvian Traders Association Henriks Danusevics told the business news portal BNN.

The pragmatic management of the German company did not make a mistake in concluding that it is more profitable for them to invest in Sweden, Ireland and Belgium.
Consequently, they sold their properties to Estonians in 2007, thus stopping their operations in Latvia.
No new market players can be expected.

Read the full article in the BNN platform.