Aerodium dispute draws in EC

  • 2010-06-16
  • Staff and wire reports

WHAT GOES UP: Latvia’s image abroad isn’t being helped by this latest scandal surrounding its Shanghai Expo pavilion.

RIGA - After the recent string of accusations flying back and forth amid possible breaches of the law in the construction in Jelgava of a vertical wind tunnel by the company Aerodium, the European Commission has turned to the Latvian Finance Ministry for more details about the project, reports news agency LETA. The Commission is currently waiting for this information to be provided by the Finance Ministry, says the Commission’s press secretary Ivars Busmanis.
The Commission’s representation in Latvia previously forwarded the recent public statements about the possible misuse of European Union structural funds in implementation of the Jelgava wind tunnel project to the EU Regional Policy Directorate General, and the Directorate General said that more information was necessary from the Finance Ministry about the matter.

At the same time, Busmanis stressed that reviewing projects was the responsibility of the member states and is within the member states’ competence. There is a special commission in Latvia, which also includes one representative from the European Commission for appraising projects vying for EU funds.

The Commission is stepping into the arena of growing mudslinging and possible criminal activities surrounding Aerodium with its contribution to the Latvian pavilion at this year’s World Expo in Shanghai.
The Latvian Investment and Development Agency (LIDA) Director Andris Ozols has said that Aerodium chief Ivars Beitans was planning to defraud LIDA and the European Commission of money in implementation of a wind tunnel project, similar to the one at the Expo, in Jelgava. In turn, Ivars Beitans, head of Aerodium, said that Ozols was well acquainted with all the financial problems in Jelgava, and that the company had never tried to conceal problems from him. Beitans adds that Ozols tried to use this to his advantage by extorting a bribe from the company.

As reported last week, the LIDA director claims that the company, having received significant funding to construct a science pavilion in Jelgava hasn’t yet carried this out, despite the state investing significant resources in the project. Beitans says that the project was fully operational and was used for training army personnel and instructors, despite not being open to the public.

“I had dinner with Latvian Investment and Development Agency Director Andris Ozols in China in September 2009. Ozols asked me to switch my mobile phone off, and announced that I would have to pay 8 percent of our planned turnover and profit at the upcoming Expo fair to someone ‘above him,’” claimed Beitans at a June 11 press conference.
Beitans also said that earlier last week, when he had returned from China, all information about the bribe extortion attempt by Ozols was forwarded to the Corruption Prevention Bureau. “I was at the Corruption Prevention Bureau this morning, which is why I will not be able to offer further comment after the press conference,” said Beitans.

It was first hinted, says Beitans, that a bribe would have to be paid already in the spring of 2009. “In preparing for the Expo, I, my business partner Ingus Augstkalns and Ozols visited China. I do not remember the exact dates, but there was a party one evening, and the next morning Augstkalns told me that Ozols had said that a bribe would have to be provided. Augstkalns is currently in China, but he is ready to be questioned at the Corruption Prevention Bureau when he returns,” said Beitans.

The wind tunnel company director believes that the preparations for the Expo, from Sept. 16, 2008 to the day the construction of the Latvian pavilion finally started, took so long because there were attempts being made to make Aerodium share its planned turnover and profit. “Many bureaucratic obstacles were being set up on the pretext of state interests, but in reality a private individual’s financial interests were being lobbied,” said Beitans.

In the beginning, Aerodium did not pay much attention and played along, “because we wanted to complete this project and take part in the fair very much,” Beitans says. But as Aerodium was not providing money, the extortion attempts became unbearable. “Hints were being dropped all the time that we would have to share, that certain people, whose names were not revealed to us, would have to be accepted as co-owners of Aerodium. While implementing the project, we were being zombied incessantly, LIDA regularly sent us letters that the project was not being implemented the right way. Someone called Aerodium Financial Director Andris Keziks and said that if no bribe would be offered, ‘we will begin to exterminate you.’”

Aerodium manager for the Expo project, Didzis Pilans, said that this past February or March, Aerodium had to accept a “financial auditor,” who did not introduce himself but said that he was working for Ozols. Aerodium had to reveal all its financial information to that person. “Apparently information was being gathered to prepare an Aerodium takeover deal,” said Beitans.

Asked why he did not turn to the Corruption Prevention Bureau right away when they found out that they would be asked to pay a bribe, Beitans said that he did not want to ruin the Expo project. “If we had reported a year ago, it would have been a scandal, there would have been no Latvian pavilion in Shanghai, and we would have lost all the money that we had invested by then,” he said.

Pilans said that initial demands were for Aerodium to pay a double-digit bribe, “but we kept on haggling and eventually we were told to pay 8 percent of the planned turnover and profit amount.”
Beitans claims not to have been introduced to Ozols until the fall of 2008, when the decision was made on Latvia’s participation in the Expo. “In the beginning we had quite friendly relations; I even took Ozols to Moscow, where I taught him how to skydive. I think it must have been the happiest day in Ozols’ life. I believe that Ozols must be an unhappy man, because one cannot be happy living alone in a large house with two dogs,” Beitans added.

Ozols claims that he had turned to the authorities already on June 2, after having received what he considered direct threats from Beitans via a text message. This was the “last straw,” said Ozols, before he blew the whistle on fraud and bribery on Beitans’ part.

The development agency director pointed to a “conceptual dispute” with Beitans over financial difficulties facing the Latvian Pavilion at the ‘World Expo 2010’ that heated up when Beitans began making threats. Ozols claims that Aerodium is using the current dispute to “blackmail LIDA.”
Ozols categorically denies accepting bribes, and says that Beitans is a “con-man.” He also said that there were fewer visitors at the Latvian pavilion than at those of Lithuania and Estonia, and that advertisements by Latvian railway company Latvijas dzelzcels, the main sponsor of the pavilion, were smaller than the advertisements of Lufthansa, which were put up by Aerodium representatives.

he agreement concluded between Aerodium and LIDA is worth a total of 2.5 million lats (3.5 million euros).
The Corruption Prevention Bureau is already investigating the matter, and Minister of Economy Artis Kampars (New Era) has ordered an internal investigation into the matter.