It appears the company's management secretly signed a protocol of intent with the Greek shipping company Tsakos to buy three new tankers for $42 million each and has already paid a guarantee deposit worth 10 percent of the deal. The company stands to lose this down-payment if the deal does not go ahead. Critics of the deal say LASCO is paying $10 million too much per tanker.
The deal emerged when LASCO's board requested permission from the company's supervisory council and its state trustees to obtain the loan. Officials do not dispute the company's need for new ships, but are furious that a protocol of intent was signed and $12 million transferred to the seller without the relevant authorities being informed.
Economy Minister Aigars Kalvitis blamed the director general of the Latvian Privatization Agency, Janis Naglis, for inadequate supervision of the company.
A spokesperson for Kalvitis said Naglis would have to submit a legal evaluation of the new tanker buying procedure.
The minister has also ordered Naglis to evaluate the suitability of the shipping company's state trustees, who had failed to inform either the agency or the ministry of what was a sizable deal.
Kalvitis said that only in late August had he learnt of the deal which the shipping company's management and the state trustees had agreed on with Tsakos in early July. He made the discovery by reading the newspapers.
Naglis told reporters there were no grounds for firing the trustees or claiming they had taken advantage of their positions. They had simply accepted the decision to buy the tankers on the advice of the privatization agency and the company's management, he said.
But he conceded that the trustees had erred in not informing the agency of the down payment on the ships.
Sandris Grasis, an assistant to company President Andris Klavins, said that shipping company had had to make a down payment in order not to lose the deal. "The shipping market is like the car market - offers come and go,"he told The Baltic Times. "We'd been waiting for two years for such an offer to materialize."
He denied claims that the ships were overpriced. "We have neither chosen the worst or the most expensive ones."
The Latvian Shipping Company is among the largest shipping companies in the world, and mainly transports crude oil and oil products. It is one of the last large companies remaining in state hands and has been the focus of countless politicized disputes. The third attempt to privatize the company failed earlier this year.
Latvian Prime Minister Andris Berzins recently said he expected the company to be privatized by the end of next year.
In the first six months of 2001, LASCO made profits of $21 million but in 2000 its losses amounted to $20.5 million. The management said the losses were due to re-evaluation of the company's aging fleet.