RIGA - Lattelecom CEO Nils Melngailis, one of the architects behind a complex 600 million euro transaction involving the state and several telecommunication companies, was removed as the firm's chairman on Dec. 7, throwing doubt over the fate of the deal. He will, however, keep the CEO's post.
Lattelecom's financial director and board member, Juris Gulbis, will assume the chairman's position.
Gundars Strautmanis, chairman of Lattelecom's council, said that Melngailis' place on the five-member board will remain empty. He said the council would begin talks to fill the vacancy in the nearest future.
The decision to remove Melngailis is widely seen as an attempt by the ruling coalition to prevent the privatization of Lattelecom, which remains 51 percent owned by the state.
Lattelecom executives, led by Melngailis, earlier this year proposed a management-employee buyout that, together with the sale of the state's stake in LMT, a leading mobile operator, would have put a whopping 439 million lats (624 million euros) into state coffers.
The government gave its preliminary approval to the deal but now seems to have backed away. Several members of the right-wing For Fatherland and Freedom party have spoken out against the deal, though there have been reports that the main opposition to the buyout comes from People's Party founder Andris Skele.
Lattelecom's new chairman, Juris Gulbis, is reportedly linked to Skele as both men worked at the S.P.I. Group, a producer and distributor of alcoholic beverages headquartered in Geneva.
Gaidis Berzins, the interim and outgoing economy minister, is also opposed to the deal, according to reports.
It is unclear why the previous economy minister, Jurijs Strods, also a member of For Fatherland and Freedom party, gave preliminary approval to the deal while his party colleagues have spoken out against it.
Meanwhile, TeliaSonera, which owns the remaining 49 percent stake in Lattelecom and a 49 percent interest in LMT, has said all along that it continues to hope that it could fully own both telecommunication companies. Earlier, however, the outgoing government of Aigars Kalvitis spoke against this option, fearing that TeliaSonera would dominate the market.