The management of SJSC “Latvijas dzelzceļš” has asked to evaluate the activity of the Minister of Transport in the interest of private companies | Latvijas dzelzceļš

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The management of SJSC “Latvijas dzelzceļš” has asked to evaluate the activity of the Minister of Transport in the interest of private companies

SJSC Latvijas dzelzceļš(LDz) Chairman of the Board Edvīns Bērziņš and Member of the Board Aivars Strakšas have sent an application to the law enforcement authorities with the request to evaluate possible activity of the Minister of Transport of the Republic of Latvia, Tālis Linkaits, in the interest of private industrial companies, while at the same time attempting to cause reduction of the value and privatisation of LDz. A letter was sent to the Prosecutor General of the Republic of Latvia, Corruption Prevention and Combating Bureau, National Security Committee of the Saeima, as well as the Prime Minister Krišjānis Kariņš, and the State Chancellery.

When evaluating the available information and former actions of the Minister, the management of LDz believes that the value of the company is being deliberately reduced with a purpose to achieve its privatisation. At the same time, the attention of the law enforcement authorities is called towards systematic failure to comply with the governance guidelines for the state capital companies set out by the Organisation for Economic Co-operation and Development which is manifested as influence on the Council of LDz and not taking it into account when making decisions and not involving it into communication with the management of LDz.

“Public statements regarding possible participation of the company and its management in corrupt transactions create an adverse influence not only on the company which is significant to the national economy, but also to the reputation of the country in general. Such unjustified statements, even if based on deliberately false information provided to the Minister of Transport by the third parties, affects the creditworthiness of LDz and the conditions of financial obligations; these statements harm relationships with the partners and customers,” says the Chairman of the Board of LDz Edvīns Bērziņš.

By sending the letter to the law enforcement authorities, as well as the governmental officials, the management of LDz asks to evaluate the actions by the Minister of Transport aimed at influencing the Council of LDz with a purpose to achieve dismissal of the Chairman and two Members of the Board of LDz, to evaluate the possible involvement of Mr Linkaits in corruptive actions while lobbying the interests of JSC (AS) “Baltijas ekspresis”, and other matters. At the same time request has been made to stop the activity of Mr Linkaits and to mitigate the adverse consequences that are already caused and endanger not only the activity of LDz, but also participation of Latvia in OECD.

LDz has calculated the possible risks that can be caused by such statements of the Minister: existing and potential loan agreements with the banks are endangered; due to mistrust by banks disbursement of salaries is subject to risk, threat to implementation of railway network electrification project and projects financed by the European Union, decrease in the number of foreign customers, and thus also rapid loss of freight volume which will in turn have negative consequences not only for the financial performance of the company, but also the growth of the national economy in general. 

Thanks to purposeful work and measures to increase efficiency, LDz has continued a stable financial activity, as well as has been able to increase remuneration to employees by 5% without increasing the payment for services as provided by the agreement with the trade union of Latvian railway workers and transport industry.

Already in 2018, LDz showed the best performance of economic activity within the last three years, and the trend has continued in the first quarter of 2019. Even though due to objective reasons the volume of transported cargo slightly lags behind from the indicators of the first quarter of the previous year, a significant increase can be observed in separate freight segments. The first quarter of 2019 in comparison with the same period of the previous year has seen an increase of 30.3% in transport of chemical cargo, and the volume of transported timber has increased by 48.0% as well. The largest part of transported freight or 46.2% is still formed by coal, and this volume has increased by 9.8% in comparison with the respective period of the last year.

The total volume of freight transported during the first quarter by using the infrastructure of LDz was 11.6 million tonnes. Net turnover of the first quarter is 51.3 million euro, but profit after taxes – 3 million euro, demonstrating provision of a stable financial activity. The projected freight turnover of this year still remains at 47-49 million tonnes.