Peilāns: We plan to develop large-sized wooden construction in Latvia and around Europe

Māris Peilāns, the Chairman of the Board of “Ceļu būvniecības sabiedrība “IGATE”” (Road Construction Company IGATE), who also manages several other woodworking and construction companies, has met the beginning of the new year with dual feelings – satisfaction with successfully completed projects and wondering, how suspicions regarding “crimes in construction processes” in the construction of Latvian eastern border expressed by a single state authority –  Internal Security Bureau (ISB) – can paralyse the entire business, and not only for Igate, but also for its subsidiaries. Although internal affairs and judicial authorities always emphasise in their announcements that a person shall not be considered guilty until it has been decided by a court, the suspect’s status imposed in this case actually encumbers continuation of the company operation. The company managed by Peilāns, which is one of the largest taxpayers in Zemgale region, is forced to release employees on a massive scale and “pile” them on the state’s shoulders as unemployed persons.

About the previous year and what is expected from this year – an interview with Māris Peilāns.

What was the last year like for you? In what mood did you meet the new year?

The last year was quite positive, very good, interesting and pleasant projects for us and for the public in general were completed. There is good feedback about these projects, good reviews from users, customers and also the public. But we met the end of the year with other feelings. We were accused, detained, and it was attempted to imprison representatives of our company. Our customers and creditors, banks saw it all. The result of these events is that, probably, we will release up to one hundred employees.

Are credit institutions refusing to provide funding?

Quite precisely. Or in other cases cease to serve our account.

Have you had any procurements, you have not been allowed to participate in due to your reputation?

Not because of reputation in particular, but we simply cannot take part in procurements, because we are unable to take out respective documents at banks, required for participation in such procurements at all. Credit institutions cannot be blamed for this, we only can send greetings to Valters Mūrnieks for his competence, and the competence or not so good competence of ISB, managed by him.

What were your largest projects last year?

One major project is construction of the border with Russia, on which we are working already for several years, and the customer and users are satisfied with what we have accomplished so far. And there are several other significant objects, including another border – with Belarus. Also, for example, in the nearby Ozolnieki – a roundabout: we promised to complete it in a couple of months, and we did it.  Not always these are large objects. In approximately four months we constructed a fuel filling station in Jelgava, a large part of which was constructed of timber. We constructed it, put it into operation in time, and it already works now. We also timely put into operation the large open-air stage in Jelgava – open-air concert hall “Mītava”. Among the largest objects, we had several motorways, also having good feedback. We have put these objects into operation both qualitatively and without any objections from customers. We have also invested in our subsidiary IKTK, bought equipment for them. In addition, we timely delivered acoustic panels for the open-air stage of the Latvian Song Festival, so that the general contractor could install them, creating these large acoustic shields.

According to your predictions, when ISB could shed some light on this border case? When the Bureau could raise accusation against you or remove the shadow of suspicions?

It’s difficult to say, how operatively Mūrnieks’ managed authority will work. We remind that we cooperate with them, communicate with them, we can meet at any time convenient for them, at their office, to give testimonies or sign new documents. We have always arrived, always have been there in time, we fully cooperate. We extremely want this case to be resolved as soon as possible in order to be able to work normally again, give a job to hundreds of people and pay taxes.

I don’t know, where Valters Mūrnieks has acquired his education, but these have to be fantastic technologies, how ISB are able to identify that exactly and specifically the money earned on the border is transferred from Igate’s account for some support or investment, and creation of new jobs. Although ISB mistakenly fantasises, the Bureau demonstrates, how it can identify virtual money in our account. That exactly the money earned on the border, not in Auce or Mārupe, is transferred to another company. In reality, in such conditions we even endanger any party that we support, as ISB may consider that they also deal with money laundering. This specific border contract constituted only approximately 10% of Igate’s revenue.

At the end of the year, I observed: one state institution – the Ministry of Finance (MoF) – praised us when commenting on the statistics of manufacturers, whereas another state institution – ISB – figured out that it is a criminal crime. Completely one and the same activity – investment! MoF highly appreciated the same investment that was considered by ISB an offence. And the institution managed by Mūrnieks even formulates that it causes very cumbersome consequences. Actually, ISB stands above the executive power and judicial power; however, we will allow the court to decide on the assumptions of ISB. We expect a fair judgment. Please,don’t run ahead of time, it impedes our business severely. Such “state terrorism” affects people and companies, the social  and tax system and entrepreneurship environment in the state – just assumptions by one person – one head of authority – and one authority.

Now also the State Audit Office (SAO) has made an announcement on possible offences and alleged embezzlement of funds in the construction of the eastern border.

The first thing I want to emphasise, – it surprises to a large extent that SAO analyses assumptions or divination of unknown circumstances, instead of relying only on data and facts; moreover, they bring forward conspiracy theories that are not appropriate for such a serious authority, which leads to suspicions, whether the Head of the State Audit Office Elita Krūmiņa does not use the authority resources unlawfully and build personal political advertising for the future. In this case another authority, provided that such exists, could analyse, how SAO itself embezzles its budget and funds of taxpayers for implementation of inappropriate functions. In the comments on construction of the eastern border, in order to create a populist myth, SAO compares prices of works that have not taken place with actually performed works, assuming or foretelling that another construction company, which would start these works, would not correct project deficiencies, which is only and solely an assumption. SAO also completely ignores the project deficiencies and, consequently, the economic usefulness of the project, and also ignores the fact that precise implementation of the project would lead to useless loss for the state. But the facts prove that the procurement was organised and the result was announced by the Provision State Agency – one separate authority, whereas the customer of the works and also the coordinator of the required changes was the State Border Guard – another separate authority. The State Border Guard didn’t participate in the procurement. Consecutively in the conspiracy theory of SAO each of these authorities and, who knows, maybe also the ministry itself, “agreed” on something with the constructor in such a refined manner, so that the Procurement Monitoring Bureau would not have any suspicions and it would deny any complaints, which existed and were examined; moreover, all the separate authorities mutually coordinated the alleged conspiracy regarding changes to the project to the smallest technical details of the construction process. Even the plot of some novels couldn’t keep up with these assumptions.

The statements regarding amounts, including value added tax, the recipient of which is the state itself, are utter nonsense and absurdity. Such demagogy and manipulation also show that SAO uses its resources for a political campaign in order to exaggerate in its statements. Consequently, out of these loudly announced 7 million as if “embezzled” by state authorities, at least one fifth should be deducted, because it is impossible to “embezzle” VAT. Though it has to be admitted that many conclusions and statements of SAO completely do not concern the constructor’s competence and capabilities to gain any benefit.

Also, I will not go deep into the legal dispute that in several nuances we consider as being lawful some things that SAO considers as “unlawful”, and vice versa – we consider some conclusions of SAO as being unlawful. However, we can agree to the statement expressed in the press conference of SAO that, probably, everything is not defined sufficiently clear in regulatory enactments in general, leaving space for interpretations and allowing different interpretation, which is now used by SAO; therefore, it would be really useful for the future that also the Saeima and the Cabinet of Ministers assess and maybe improve and specify regulatory enactments.

At the moment, everything seems to have sad colours for you. But, if you distance yourself from all these problems caused by ISB – what would you like to achieve in this year?

We have already started to implement changes to our structure, which are in fact not changes, rather additions with new directions of operation development, which is called “green” or timber construction. We already not only build ourselves and manufacture modern large-sized “glulam” – glued laminated timber – structures for other constructors in Latvia, but also export our large-sized glulam structures for buildings in Norway, Lithuania, Sweden and other countries. In late 2019, our factory of glulam structures IKTK was visited by Norwegian state roads managers in relation to a procurement won by us for construction of a significant transport wooden bridge in Norway, in order to make sure about our transparency, conformity and potential, and they were fully satisfied, and manufacturing of building structures for this bridge is already under way in January.  Possibly, Latvia will be a champion of “wooden” fuel filling stations – with “Virši” fuel filling stations, because already a considerable number of fuel filling stations containing timber structures will be constructed in Latvia. We also have an idea to develop this direction, maybe also outside Latvia. We are working on achieving that construction of wooden skyscrapers and multi-storey buildings could be possible also in Latvia, instead of the currently allowed six storey buildings. We delegate our representatives to conferences and listen to the latest global trends in wooden construction. We also have established qualitative cooperation with firefighting experts. Our university people from Jelgava try to prove our views and work together with firefighters in a joint working group in order to modify regulatory enactments, which, taking into consideration new technology of large-scale glulam structures, would allow construction of larger buildings and more sophisticated timber structures. If we solve the issues of rescue, evacuation, safe fire extinguishing or operation at the object in collaboration with firefighters, both parties will be satisfied, and it will result in the customer living in an ecological green house. 100% renewable energy – it is our vision. We will prove that we want to bring to the world and introduce in Europe the Latvian wooden construction market, and that large hangars, swimming pools, sports gyms and multi-storey buildings can be constructed of timber.


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