Latvijas Dzelzcels CEO Berzins and board member Straksas fired

RIGA - Supervisory board at the state-owned railroad company Latvijas Dzelzcels (LDz) has agreed to terminate employment contracts with the company's management board chairman Edvins Berzins and board member Aivars Straksas, the supervisory board's chairman Janis Lange told reporters.

August 12 will be the two LDz board members' last day in their jobs. Eriks Smuksts and Ainis Sturmanis will continue as LDz board members.

Taking into consideration that there is no dialog between the company's management and the Transport Ministry, the company's management and supervisory boards agree that it is in LDz and the entire industry's interest to bring the current uncertainty to an end, Lange said after LDz supervisory board's meeting.

LDz cargo turnover has been decreasing during the past several months, and any further confusion could be damaging to the company's performance, said Lange.

The supervisory board must represent interests of the shareholders, which in this case means the state of Latvia. And the state is interested in ensuring stability in the operations and development of LDz, said Lange. If the current period of confusion continues any longer, it may have negative consequences for LDz and the entire transport industry. The decision made today and the appointment of temporary board members is meant to prevent this from happening, he explained.

Lange thanked the current management board for its job. "Last year's results were very good, the financial goals were all met and even exceeded, which was appreciated by the company's supervisory council as well as the shareholder and the Cross-sectoral Coordination Center," he said.

LDz supervisory board will invite candidates to apply for the vacant management board members' posts in the near future, added Lange. A professional employment agency will assist the supervisory board in the process.

The two temporary LDz management board members appointed by the supervisory board are Maris Kleinbergs, former CEO at companies Schenker and Latvijas Pasts, and Andris Lubans, former CEO at Latvijas Auto association and Pasazieru Vilciens railroad company.

As reported, on May 7 Transport Minister Talis Linkaits (New Conservative Party) expressed no confidence in Berzins and two other members of the LDz management board - Straksas and Sturmanis - and urged the company's supervisory board to remove them from their positions.

The minister informed that his criticism is mainly related to suspected crippling of competition, which can result in grave consequences both for LDz and Latvia. The minister has also obtained information about allegedly corruptive deals. This information has been forwarded to the Corruption Prevention Bureau (KNAB). An examination of several costly transactions, including marketing and advertising agreements, has revealed mismanagement on the part of the rail company’s executives, Linkaits said.

LDz executives responded by claiming that Linkaits’ allegations are aimed at preparing the state-owned rail company for privatization. Furthermore, Berzins and Straksas have asked the State Police to start criminal proceedings against Linkaits over defamation.

“By spreading declarative allegations unsubstantiated by any evidence and publicly making defamatory claims over the past month, Linkaits has significantly undermined the reputation of LDz management and the whole LDz group, causing suspicions in the public that my colleague Aivars Straksas and other managers mentioned by Linkaits have plotted to commit criminal offenses, which has seriously harmed the reputation of LDz group as a reliable partner in regional and international markets,” Berzins told LETA.

After the transport minister’s public claims of possible criminal activities in LDz, Berzins asked the KNAB to provide information on any facts that might confirm Linkaits’ allegations. “I have received compelling information that KNAB has no facts about my or Straksas’ involvement in any corruptive activities,” said Berzins.

Latvijas Dzelzcels is a fully state-owned enterprise managing public railway infrastructure. It is the leading company of the LDz Group, which includes six subsidiaries.