RIGA - Latvian Auditor General Inguna Sudraba has announced that over 35 million euros have been wasted on the construction of the new Dienvidu (Southern) Bridge in the Riga.
"We established in the audit and counted 27 million lats (38.4 million euros) we consider wasted, because the local authority has approved such construction cost increases that could not be legally permitted," said Sudraba.
Sudraba said that the local authority had been working uneconomically throughout the whole construction process. While original estimates of the first two construction phases were expected to cost 108 million lats, the costs eventually surged to 570 million lats. The chief auditor noted each lat spent on the bridge cost an additional 0.87 lats, while the construction work, in her words, cost 304 million lats.
Sudraba said 27 million lats were wasted due to illegal actions on the part of the Riga City Council.
"First of all, the Riga City Council acted illegally by concluding an agreement with Dienvidu Tilti firm on conditions that had not been included in the original rules of the tender, namely, the principles of covering cost increases. The rules of the tender allowed for the maximum cost increase to reach 10 percent, but afterwards, when the contract was signed, all restrictions were essentially lifted, accepting all builders' conditions and paying any cost increases," said Sudraba.
The Riga local authority had also illegally approved economically groundless construction cost increases, wasting 27 million lats worth of municipal funds.
"The audit found that the construction financing model chosen by the local authority ensured the bulk of the cost increases, as it provided for a deferred payment of the loan taken for building the bridge until 2010, which upped the costs of the Dienvidu Bridge construction by 264 million lats, or 87 percent," reported the State Audit Office.
The local authority also acted in violation of legislative standards in settling an agreement with Deutsche Bank on a 567 million lat loan for the construction of the bridge and maintaining bookkeeping records related to the project, the State Audit Office said.
The auditor general said that the results of the audit would be submitted to the Prosecutor General's Office.
Riga City Mayor Janis Birks has said that the bridge is vital to Riga city traffic, despite claims of corruption and money laundering.
"The Southern bridge is a necessary traffic infrastructure object, since in the last 10 years, Riga has filled out. The new bridge's organization in Riga was vitally important, as the city admits that the growing intensity of traffic begs a big solution," said Birks.
The completion of the first three stages of design and construction cost taxpayers a total of 85.5 million lats, including a planning competition. However, the costly first stage process also involved taking out a 20-30 year loan by the municipal government.
The Dienvidu Bridge was opened to traffic right before November 18, 2008. The construction of the bridge is being conducted in three stages. The general contractor is Dienvidu Tilts, uniting six of the biggest Latvian construction companies: Skonto Buve, Latvijas Tilti, BMGS, Tilts, Rigas Tilti and Viadukts.
The State Audit Office is the highest audit authority in Latvia. It examines the expenditure and revenues of the government and local authorities' budgets and the use of public and municipal assets.
