Trouble over oily waters

  • 2005-02-02
  • Compiled by Ben Nimmo
A chronology of the boardroom wars engulfing Ventspils' transit business

The companies

Ventspils Nafta, 38 percent state-owned, majority-owned by Latvijas Naftas Tranzits (LNT) LNT, majority-owned by Ventbunkers (VB) Ventbunkers, majority-owned by Yelverton Investments (YI)YI, registered offshore, undisclosed shareholders

The players

Aivars Lembergs, mayor of Ventspils. Officially owns 0.27 percent holding in VBOlegs Stepanovs, 13.34 percent shareholder in VB Martins Kveps, Stepanovs' representativeKrisjanis Karins, economy minister (New Era)Mamerts Vaivads, chairman of Latvijas Naftas TranzitsJanis Endzins, chief notary, Latvian Commercial Register

The plot

January 2003: Russia ceases pipeline deliveries of crude to Ventspils. Experts say it will only be reopened if a Russian company buys Latvia’s transit business.
Dec 2003 – Jan 2004: three foreign groups open talks on acquiring VN. No tangible results. Throughout 2004, public and business figures in Latvia and Russia call for a deal to be made so the pipeline can reopen. No business results.
Nov. 9, 2004: acrimonious VB shareholder meeting pits committee against board of directors over VB’s role in LNT. The committee is voted out and replaced.
Nov. 13: VB meeting to discuss differences between board and committee fails for lack of quorum.
Dec. 8: Kveps calls a repeat of the Nov. 13 meeting on Stepanovs’ behalf. Neither YI nor Lembergs are present. Minority shareholders holding a 27 percent stake invoke a VB statute that allows a minority to take action if a prior meeting failed for lack of quorum and vote to replace the entire committee. The new committee votes in a new board of directors chaired by Dzintars Kass.
Dec. 9: ousted chairman Miks Ekbaums invokes the economic police, alleging forged signatures. Lembergs calls the coup “counterfeit and illegal.”
Dec. 19: members of Kass’ board invoke the state police, alleging false information in Ekbaums’ claim.
Dec. 22: Stepanovs predicts that VN will be sold in early 2005. President Vaira Vike-Freiberga declares that VN’s future should not be discussed until its ownership via VB and YI is clarified.
Dec. 23: Endzins rejects Kass’ board on technical grounds, reinstating Ekbaums. Stepanovs’ ally Olafs Berkis calls the action “illegal and self-contradictory.” Economy Minister Karins calls the state’s stake in VN a “hollow shell” and meets with privatization officials to discuss its sale.
Christmas passes without goodwill.
Dec. 28: Kveps asks the Justice Ministry to overturn Endzins’ decision.


Dec. 29: Stepanovs blames Lembergs for the failure of VN sale talks, alleging that he owns an undisclosed interest in YI.
Jan. 5, 2005: Lembergs denies all allegations, calling Stepanovs’ claims “politically motivated.”
Jan. 6: Karins and Vaivads meet to discuss VN. Official reports call the discussions “businesslike and constructive.”
Jan. 7: Karins decides the state’s interests in VN are sufficiently protected, but admits that, as a minority shareholder, the state’s hands are tied in decision-making, especially regarding sale of the company.
Jan. 13: Karins alleges that the 1997 privatization of VN did not serve the state’s interests and that diesel supplies to Ventspils are suffering from “abnormal losses” due to “organised theft.” He indicates that his options are to renationalize VN, or else find enough shareholder support to sell a controlling interest in the company.
Jan. 17: Russian Ambassador Viktor Kalyuzhniy blames Latvia’s oil transit problems on “mistakes” committed by VN’s management, especially in raising tariffs to an uneconomic level, and says that the pipeline will be re-opened when they “see some sense.”
Jan. 18: a commercial registry notary registers Kass as VB’s chairman. Kass calls a shareholder meeting “to dismiss and elect the committee” for Feb. 24.
Jan. 20: Vaivads calls Karins’ comments “groundless” and “politically motivated.” Endzins representative reverses notary’s action and reinstates Ekbaums.
Jan. 28: LNT shareholder Julijs Krumins says Lembergs is YI’s main shareholder, citing documents allegedly held by the state Prosecutor’s Office. His company, Man-Tess Tranzits, advertises its 3.8 percent stake in LNT for sale, but Krumins explains that nobody will buy them since LNT has been “plundered” by the transfer of its diesel pipeline to VB. Lembergs claims that the comments are politically motivated.
Jan. 31: Krumins announces that he is considering filing a lawsuit against Lembergs, LNT’s management and majority shareholders. Lembergs again denies all claims, stating that he has no connection with LNT.
More developments to follow.