RIGA - The Latvian government turned to the Stockholm Court of Arbitration last
week in an effort to end a contract between Latvia's Digital Radio and
Television, in which it is a shareholder, and London-based Kempmayer Media.
The Bureau for Preventing and Controlling Corruption has also brought
charges against the November 2002 deal with Kempmayer, and a criminal case
has been launched against state officials involved the digital TV project.
Diana Kurpniece, head of the press department for the anticorruption bureau,
said that the investigation was still in the evidence-gathering phase.
According to the contract, Kempayer was obliged to receive $53 million (36
million lats) for the first stage of introducing digital television in Riga
and the surrounding area.
The digital television market arose in 2000 with the appearance of LDRT. The
company bought a 23 percent stake in Latvijas Mobilais Telefons now
reportedly worth between 86 million lats - 114 million lats.
LDRT was allowed to purchase the lucrative stake in Latvia's premier mobile
phone company in order to finance the digital TV project.
According to Juris Kaza, a journalist with Dienas Bizness, the extraordinary
value of the LMT stock is at the root of the government's decision to take
the case to arbitration.
"The government is going to pry the shares out of the digital project, so a
scandal has been created," Kaza said.
One of the government's arguments is that Kempmayer Media is an obscure
company with little transparency.
Kaza, however, doubted the validity of this argument. "Kempmayer has
delivered everything it has been paid to do," he said.
Fallout over the controversial deal has already been seen in the Transport
Ministry, where the communication department director, Inara Rudaka, has
Sarma Kocane, spokesperson for Transport Minister Roberts Zile, said that in
the minister's view the deal is not advantageous for Latvia.
Meanwhile, the anticorruption bureau's criminal case was initiated shortly
after Prime Minister Einars Repse's Aug. 31 comments that the digital TV
deal has been undervalued by millions of lats and that a criminal
investigation should be started.