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Repse demands LASCO sell-off be halted

  • 2002-01-31
  • BNS
RIGA - The popular former head of Latvia's central bank has called for the latest attempt to privatize the Latvian Shipping Company to be suspended, alleging that it is an attempt to defraud the country.

"If we want to privatize LASCO in the interests of the state, a new privatization model has to be developed," said ex-central banker Einars Repse, who left the office to spearhead a new political party, Jaunais Laiks (New Time) at a news conference on Jan. 24.

Under the current LASCO privatization regulations a public offering of 32 percent of LASCO shares to be sold in exchange for privatization vouchers will be made in late February. It will be followed by the sale of a 51 percent stake for cash on the stock exchange.

LASCO, which is currently subject to a fourth privatization attempt, has amassed profits of around $25 million, is currently one of the world's leaders in oil-product shipments and employs around 2,500 people, company President Andris Klavins says.

The shipping company's unaudited profits for the first 11 months of 2001 were posted at $27.07 million, four times greater than at the same point in the previous year.

In the first 11 months of last year LASCO's net shipments amounted to $122.48 million, 14 percent more than the previous year. The company posted pre-tax profits of $5.3 million on a turnover of $178.9 million in 2000 before it revalued its aging fleet and posted losses of $20.5 million.

Repse's claim

Unlike the previous, failed LASCO sell-off attempts, when the process was rigged in favor of a certain bidder, this time LASCO is being openly divided among several interested parties, said Repse.

"It is a crime to give away a majority of LASCO shares at half the price, hardly bothering to conceal the fact that the purpose of the move is to later resell these shares to a strategic investor at a price adequate to the company's value," said Repse.

No serious investor would be interested in paying cash for 51 percent in LASCO after 32 percent of the company had been sold for privatization vouchers, he said.

He suggested the LASCO sale should begin with the sale of a 75 percent stake to a strategic investor at an open auction. Only when the strategic investor holds a controlling stake, should some of the remaining shares be sold in a public offering in exchange for vouchers. Repse also urged that the company's valuation should be started immediately.

Adding an additional note of caution he stressed that even his privatization proposals could be abused if those who hold large amounts of vouchers conspired beforehand and agreed on a price to be paid for those shares to be exchanged for vouchers.

Repse said his alternative LASCO privatization model could be accomplished by the end of the year if it had the current government's backing.

Opposition

But Economy Minister Aigars Kalvitis rejected Repse's criticism, calling the move a "pre-election step."

An Economy Ministry spokeswoman said: "At this point nothing can be canceled. If Repse had objections he could have expressed them before approval of the privatization regulations."

Kalvitis also regards Repse's proposal to sell a 75 percent stake in LASCO to a strategic investor as unjustified.

"By selling off LASCO in such a way it would become a closed joint stock company and not a public joint stock company as it will be under the current privatization regulations."

Kalvitis called on Repse not to deceive people with his recommendations. In Repse's model holders of small numbers of privatization vouchers would earn nothing, he said.

Prime Minister Andris Berzins declined to comment on Repse's position for the time being.

Shipping industry experts and pro-transparency NGO Delna, a Latvian branch of Transparency International, disapprove of the current privatization model but the ruling coalition parties have expressed their support.