Transparency International to monitor Latvian Shipping Company privatization

  • 2001-01-25
  • Ilze Arklina
RIGA - The state property privatization process in Latvia has been surrounded by an atmosphere of mistrust and allegations of corruption at various levels. To shed that cloud, an agreement to involve independent observers in the privatization of the Latvian Shipping Company was signed Jan. 24 by the Latvian Privatization Agency and the corruption watchdog Transparency International's Latvian branch, Delna.

The five-page "integrity pact," which was signed by the Privatization Agency Director Janis Naglis and Delna's Chairwoman Inese Voika, is designed to eliminate the possibility of corruption in the privatization of the shipping company, a key state holding in which the government hopes to sell a 68 percent share to a strategic investor.

Voika told reporters that the agreement is the first in Eastern Europe where a state institution agrees to write down the principles of the agreement and sign them, although Transparency International has monitored privatization processes in Bulgaria and Slovakia.

A key feature in the monitoring process will be the presence of independent observers at all stages to help free the process from the allegations of corruption that have dogged it in the past.

"Our experts will closely follow the observation of the privatization rules for the company," Voika said.

Observers will get so close that permission from the Constitution Protection Bureau, the country's chief security institution, will be needed in order to receive information labeled as secret.

They will be privy to information on the potential bidders and their proposals, as well as the minimum amount the government will be willing to sell the company for, Voika told The Baltic Times.

The three experts will be Voika, retired World Bank expert in combating corruption Clod Hovnianan from France, and a local economics expert, who has not yet been selected. All expenses related with the monitoring - 3,030 lats ($4,926) will be covered by the Soros Foundation's Latvian office.

The privatization agency's Naglis hopes the move will end speculation that has surrounded the company's privatization process since it began in 1995.

"In the politically overheated environment surrounding the privatization of large state enterprises in Latvia, this is an exact response to the politicians to show that the privatization agency has always acted openly," he said.

"We accepted this proposal [by Delna] immediately," he stressed.

It appears the integrity pact will be tested, as the privatization process has kicked up another scandal.

The company's state trustee in the Latvian Shipping Company and Fatherland and Freedom party member Eizens Cepurnieks told Delna and a few journalists that several high-ranking officials have been offered up to $1 million for tampering with the company's privatization process. Cepurnieks alleged that the officials were from the People's Party. Speaking to BNS Jan. 18, Cepurnieks said that bribes were being offered "by persons in public perception related to the so-called orange men." Orange is the official color of the People's Party.

"Cepurnieks came to me on Jan. 17 and said that Normunds Lakucs [a businessman related with the Fatherland and Freedom party] told him that he was present at the meeting where Andris Skele [the former Prime Minister and the People's Party chairman] offered $1 million to Riga Mayor Andris Argalis and Parliamentary Speaker Janis Straume to ensure support for one bidder, and Maris Grinblats, [the Fatherland and Freedom party chairman], was also present," Voika told The Baltic Times.

Cepurnieks failed to say when the alleged meeting took place or name the alleged bidder involved. Voika said she suggested Cepurnieks go to the prosecutors' office, but he instead turned to the press the following day.

"This story sounded too unbelievable, but anything should be checked," she said. "I told it to several journalists before but it somehow never had been published."

Lakucs, a council member of the privatization agency, denied that he was present at such a meeting. However, he too believes the privatization process of the Latvian Shipping Company is corrupt.

"I can't say that Skele offered a million dollars to someone in my presence, but I have heard about people walking around and offering bribes," he said.

Lakucs said that the privatization rules, passed in December, were written with one company in mind, adding that the time open to bidders, just one month, would exclude any serious bidders unless the company was already familiar with the process.

On Jan. 22, Latvian Prime Minister Andris Berzins asked Cepurnieks to speak with the prosecutor general's office this week to elaborate on his allegations. Cepurnieks, however, is abroad until early February, and soon after bids are due.

People's Party spokesman Arno Pjatkins denied any allegations that the party is linked to bribery attempts in the privatization process.

"Mr. Cepurnieks is renowned for extravagant statements which mark his place in Latvian politics," Pjatkins said.

The Latvian Shipping Company is a fat bite for investors. In 1999, the company ranked third in the world in oil products transportation volume, according to an international shipping magazine. According to Lloyd's List Economist, the company in 1999 carried nearly 10 million tons of oil products. Russian shipping companies Novorossiysk and UNICOM ranked one and two respectively.

According to data of the world's independent tanker owners' association Intertanko, the Latvian Shipping Company in 1999 was first in Northern Europe in tankers with 25,000-50,000 tons carrying capacity and second among tankers of up to 25,000 tons carrying capacity.