Skele sells pantry for $29 million

RIGA – There are many questions circulating in the media about whether he is a money launderer, a crooked businessman or just plainly a shrewd businessman. The man in question is the Latvian Prime Minister Andris Skele. The reason behind the rumors is his sale of the joint stock company New Technology and Business Development Corporation, formerly known as the Ave Lat Group.

On March 28, Skele revealed to the press that he had sold his shares in the company to an Isle of Man trustee company, Bolster Management, for $29 million in promissory notes.

The Mayor of Ventspils, Aivars Lembergs, told BNS and LETA reporters March 31 the Latvian prime minister's sale of ALG is a classic money laundering scheme. Furthermore, Lembergs wants to know how a person can earn $29 million in one year through the food industry, he said

"Mr. Lembergs did make these comments to the press on Friday," said Janis Vitolins, deputy mayor of Ventspils. "Unfortunately he can not comment any further because he is overseas conducting business."

"The sale of ALG was completely legal, and it was unnecessary for Lembergs to make such comments," said Jurgis Liepnieks, Skele's spokesman.

Skele became owner of all ALG shares when his company Corporate Management and Consulting bought ALG with debt liabilities. After Skele sold his shares in ALG, he received the $29 million in promissory notes, which can be exchanged for U.S. dollars or for shares. Skele no longer has the debt liabilities incurred in the purchase of ALG, as he has passed the liabilities on to the new owner of NTBDC, Bolster Management.

NTBDC comprises some of Latvia's best known food industries, including dairy company Rigas Piena Kombinats, fish processor Salacgriva 95, egg producer Balticovo, brewery Rigas Alus, Latvijas Balzams distillery and Latvia's chocolate maker Laima.

Liepnieks said the prime minister's sale of the Ave Lat Group was all above board and that Skele has declared his sale of assets under his income declaration for 1999 under personal assets. Liepnieks said Skele had also eliminated any conflict of interest while in office as the prime minister by asking the auditing firm Pricewaterhouse Cooper to find a suitable company to manage ALG. The auditing firm chose another Isle of Man company Abacus Ltd. and in November last year they became trustees of ALG.

Many skeptical questions have been circulating surrounding Skele's sale of ALG, centering on any influence in company decisions he may have had while in office and how the prime minister bought the ALG shares.

BNS released Skele's tax declaration for 1998 and 1999. In 1998, Skele's income tax declaration showed that he was not a millionaire. It also did not show savings or investments capable of purchasing a company worth tens of millions of dollars, a stark contrast to Skele's 1999 income tax declaration. Last year Skele's declaration did not show any major liabilities and revealed that he had become a millionaire in a period of a year.

"The tax declarations handed in by Skele are all in order," said Liepnieks. "It can easily be worked out where he has made his money.

Skele's company Corporate Management and Consulting purchased the ALG shares in April 1998. CMC then reorganized itself July 1999, and a part of the original company became Corporate Management and Investment. This new company then attached itself to ALG and took over the management of ALG in August 1999. After Corporate Management and Investment took over the reigns of the ALG, Skele became effectively sole owner of ALG, with all the debts incurred in buying the company being passed onto ALG.

Early in March this year, ALG decided on a name change and to digress its business capital into the field of information technology and possibly sell some of the food industries to potential investors.

Speculation has arisen if Skele has influenced the change of business direction and the change of name of ALG when Abacus Ltd. was the trustee of the company.

"Skele has not passed on any management decisions to the NTBDC management," said Liepnieks.

Janis Leimanis, board chairman of NTBDC, said on the other hand that it would be impossible for Skele not to have any influence in the change of direction of NTBDC. The company chairman said the actual owner of the company has a say in which way a company will be headed.

NTBDC has also abandoned ideas of becoming a publicly listed company on the Riga Stock Exchange, an idea that was being considered late last year.

There is another claim against Skele which has come from the Latvian newspaper Neatkariga Rita. They have printed that Skele, former Economics Minister Atis Sausnitis and Turiba company chairman Ivars Strautins are the owners of Bolster Management.

"Skele has absolutely no involvement with Bolster Management, and the company is an offshore trustee company found by Pricewaterhouse Cooper," said Liepnieks. "The sale of the shares was all done legally.

"All these claims by the press that Skele moved NTBDC into the computer industry to get the Latvian National Library contract are preposterous," Liepnieks said.

Neatkariga Rita would not comment any further on their story.

The opinions on Andris Skele's business etiquette vary widely. The business deal has been signed and sealed and the Latvian prime minister is now $29 million richer.