Corruption Prevention Bureau raids offices of construction companies, state officials in suspicion of cartel agreement, bribery

  • 2019-09-03
  • LETA/TBT Staff

RIGA - The Latvian Corruption Prevention Bureau (KNAB) currently is raiding offices of several construction companies and state officials, according to the information at the disposal of LETA.

One of the construction companies raided is Rere Grupa, as the company's Guntis Aboltins-Abolins confirmed.

"Yes, I can confirm that KNAB officials at present are doing their work in the company's office building. They have not asked me questions, I don't know what this is related to," Aboltins-Abolins told LETA.

Representatives of Skonto Buve, Latvijas Energoceltnieks, LNK Industries, Velve, Moduls Engineering and Binders informed LETA that their offices were not visited by anti-graft officials.

The mobile phone of Merks board chairman Oskars Ozolins has been switched off. According to unofficial sources, Merks offices have been raided. Also, mobile phone of Abora board chairman Juris Kravalis has been switched off.

Arcers building company responded to a phone call, but informed LETA that KNAB officials currently are in their office.

KNAB informed LETA that the anti-corruption bureau in cooperation with the Competition Council is conducting sanctioned raids. The raids are based on suspicion of involvement of at least ten largest construction comapnies in criminal action and breaches of the Competition Law.

KNAB on September 19, 2018, started a criminal procedure on large-scale graft, abuse of authorities. The Competition Council, meanwhile, is investigating an alleged breach of the Competition Law - illegal cartel agreement.

The facts collected by KNAB suggest of possible large scale bribery, possible agreement of procurement bidders on prices, bribery of state officials in order to ensure business interests in issues unrelated to procurements.

The crimes have been committed in a time period between early 2015 and mid-2018. The possible sums of bribes range from EUR 25,000 to several hundreds of thousands of euros.

KNAB has a reason to believe that at least ten largest construction companies have been invovled in the crimes.

KNAB sent information on alleged cartel agreement obtained during pre-trial investigation to the Competition Council, and the Competition Council launched investigation of the case in relation to breach of the Competition Law. In order to obtain evidence in the cases launched by both institutions, the Competition Council today is making unannounced inspections in ten construction companies in parallel to the processual operations conducted by KNAB.

According to the information at the disposal of the Competition Council, construction companies in a period of several years have coordinated their actions in relation of market distribution, participation in public and private tenders in Riga and Latvian regions. Cartel agreement is the biggest breach of the competition rights.

Further investigation will be conducted by KNAB and the Competition Council in line with each institution's competence.

The Competition Council noted that the inspections are the next step following launch of investigation, and the goal of these inspections is to obtain evidence. Inspections alone, however, do not prove the guilt of the companies and do not suggest of the outcome of the investigation.

KNAB chief Jekabs Straume said that the biggest corruption risks are in areas with public procurements because large financial resources are involved. Impact of large public procurements on the national economy is serious, therefore everything possible should be done to ensure that public and municipal tenders are correct, fair and the best offer always wins.