The supervisory board at the state-owned railroad company Latvijas Dzelzceļš (Latvian Railways) has agreed to terminate employment contracts with the company’s management board chairman Edvīns Bērziņš and board member Aivars Strakšas, the supervisory board’s chairman Jānis Lange told the press July 25.
August 12 will be the two board members’ last day in their jobs. Ēriks Šmuksts and Ainis Stūrmanis will continue as board members at the state-owned railways company.
As there is no dialogue between the company’s management and the Transport Ministry, the company’s management and supervisory boards agree that it is in Latvian Railways’ and the entire industry’s interest to bring the current uncertainty to an end, Lange said after the supervisory board’s meeting.
Cargo turnover at the company has been decreasing during the past several months, and any further confusion could be damaging to the company’s performance, said Lange.
The supervisory board represents interests of the shareholders, which in this case means the state of Latvia. And the state is interested in ensuring stability in the operations and development of Latvian Railways, said Lange. If the current period of confusion continues any longer, it may have negative consequences for Latvian Railways and the entire transport industry. The decision made today and the appointment of temporary board members is meant to prevent this from happening, he explained.
Lange thanked the current management board for its job. “Last year’s results were very good, the financial goals were all met and even exceeded, which was appreciated by the company’s supervisory council as well as the shareholder and the Cross-sectoral Coordination Center,” he said.
LDz supervisory board will invite candidates to apply for the vacant management board members’ posts in the near future, added Lange. A professional employment agency will assist the supervisory board in the process.
The two temporary LDz management board members appointed by the supervisory board are Māris Kleinbergs, former CEO at companies Schenker and Latvijas Pasts, and Andris Lubāns, former CEO at Latvijas Auto association and Pasazieru Vilciens railroad company.
As reported, on May 7 Transport Minister Talis Linkaits (New Conservative Party) expressed no confidence in Bērziņš and two other members of the Latvian Railways management board – Strakšas and Stūrmanis, urging the company’s supervisory board to remove them from their positions.
The minister said that his criticism is mainly related to suspected crippling of competition, which can result in grave consequences both for Latvian Railways and Latvia. The minister has also obtained information about allegedly corruptive deals. This information has been forwarded to the Corruption Prevention and Combating Bureau (KNAB). An examination of several costly transactions, including marketing and advertising agreements, has revealed mismanagement on the part of the rail company’s executives, Linkaits said.
Latvian Railways executives responded by claiming that Linkaits’ allegations are aimed at preparing the state-owned rail company for privatization. Furthermore, Bērziņš and Strakšas have asked the State Police to start criminal proceedings against Linkaits over defamation.
“By spreading declarative allegations unsubstantiated by any evidence and publicly making defamatory claims over the past month, Linkaits has significantly undermined the reputation of Latvian Railways management and the whole Latvian Railways group, causing suspicions in the public that my colleague Aivars Straksas and other managers mentioned by Linkaits have plotted to commit criminal offenses, which has seriously harmed the reputation of Latvian Railways group as a reliable partner in regional and international markets,” Bērziņš told LETA.
After the transport minister’s public claims of possible criminal activities in Latvian Railways, Berzins asked the KNAB to provide information on any facts that might confirm Linkaits’ allegations. “I have received compelling information that KNAB has no facts about my or Straksas’ involvement in any corruptive activities,” said Berzins.
Latvian Railways is a fully state-owned enterprise managing public railway infrastructure. It is the leading company of the Latvian Railways Group, which includes six subsidiaries.
It employs about ten thousand people serving close to 2,000 km of rail lines.