$23 million to be stolen

  • 2001-07-26
  • Aivars Ozolins
While some people are delighted about the successful 2 percent sale of Latvijas Gaze shares - at a auction on July 19, the state got almost 10 million lats ($15.62 million), three times more than they hoped - others immediately tried to trade their reserves of privatization vouchers for shares of the company. In doing so, about 15 million lats would have been stolen from the state.

The mechanism of the deal is a classic cliché for a country with a highly developed level of corruption, which the World Bank has called the "state capture" or the buying of favorable political decisions for separate economic groups. The executor in this case is the council of the Latvian Privatization Agency, a political formation that settles the privatization of state companies.

On July 20 the council suddenly decided to change its previous position that all state-owned shares of Latvijas Gaze should be sold on the stock market for cash, and they voted that the half of the company's shares that are the property of the state should be sold for vouchers.

If we are looking at the prices from the July 19th sale, this 3 percent that the privatization council decided to give away for vouchers would bring some 15 million lats to the public treasury.

The absurd action of the privatization council does not make me wonder, as it has happened not for the first time. Three years ago, in July 1998, the council passed a vote that allowed the stock company Latvijas Naftas Tranzits to save up to 8 million lats at the state's expense by paying for the desired oil company Ventspils Nafta's shares with vouchers instead of cash.

What is surprising is the rough and unabashed blatancy of the attempt to steal a sum of money twice as large as that in 1998. Then, Economy Minister Laimonis Strujevics arranged a profitable project for the citizens of Ventspils labeled "Arranging a System of Payment." At the time, only one member of the council, Anatolijs Jerumanis from the New Party, suggested this proposal. The People's Party's representative Normunds Luste became very happy with the idea, and the council majority supported it.

Now the current Minister of Economy Aigars Kalvitis is acting like it all has come as a big "surprise" to him. Now People's Party boss Andris Skele has joined in and calmed us down by saying that this was a "compromise," and that money isn't the only thing to think about.

The question is, what else does Skele have to think about, if not the state's money ? We can only guess: if it's true that the companies of Ventspils own at least one-quarter of the unused vouchers, and if it is true that Skele and the mayor of Ventspils, Aivars Lembergs, have now found a "common denominator" on "important political and business questions," and if it is true that Skele promoted the Russian gas monopoly Gazprom's private offspring Itera to become an important shareholder of Latvijas Gaze, then the small-scale private owners of the privatization vouchers should bear no hope that this privatization will be regulated so that they will be able to take part in it with their tiny quantity of vouchers.

Itera has already announced that it is ready to also buy Latvijas Gaze shares for vouchers. We can infer that Itera and Gazprom are together trying to gain control over the company and that the final step is that they need to get the remaining 6 percent of its shares.

What they cannot get for vouchers now they hope that maybe at a later date they can buy from "arrangers of the business environment," who have millions of vouchers and will participate in the purchase of this 3 percent of the shares.

Then Skele's "compromise version" would be as follows: the big voucher owners exchange inferior slips of paper for money; the state loses 15 million lats; and the strategically important Latvian gas monopoly is controlled by a Russian gas monopoly.

The naked shamelessness with which this "compromise" is being settled is frightening. Latvian Prime Minister Andris Berzins directly assigned Kalvitis to stop the privatization agency council's decision and hand the question over to the government.

Was it considered that the prime minister will calmly allow 15 million lats to be stolen from the state? Maybe it has been decided that this "arranging of the business environment" has to be completed in order for the government – if not this one then some other – to become the most comfortable place to steal money from the state?