Criminal proceedings, including conducting a company search on January 30, have begun against municipal housing management company “ Rīgas namu pārvaldnieks ” (RNP) in regards to large-scale organized fraud and money laundering, and two persons have been detained, including the “Liftu alianse” company owner Igors Babkins, according to Latvian Television on January 31.
“The search ended this morning at 7:20 a.m.. The documents taken during proceedings won’t hinder “Rīgas namu pārvaldnieks” operations. The process driver, the State Police , could tell you more in this situation,” said company representative Krists Leiškalns.
The search was conducted at RNP and “Liftu alianse” offices in Rīga by the State Police Economic Crimes Unit (ENAP) and evidence was taken, according to ENAP Chief Pēteris Bauska. He said the organized fraud and money laundering was possibly conducted by several companies that provide services for RNP.
“We’re talking about a long time period. Transaction of several million euros were conducted. The amount that needs to be examined and amount of seized evidence is very large. We’re looking for possible footprints abroad,” said Bauska.
The State Audit Office raised the alarm several years ago that apartment owners are paying for wasteful spending and unlawful operations. RNP’s yearly turnover is around 60 million euros. The company was also criticized for risking losing six million euros of client money through the insolvent PNB Bank.
As previously reported, it is understood that most, but not all of the €6m RNP kept with the bank belonged to its clients. Now RNP says all of its clients qualify for a state-guaranteed deposit reimbursement of up to €100,000 as none of them have deposited more with the company.
But it is not clear whether the housing manager has done all it could to ensure clients don’t lose their money. RNP boss Aivars Gontarevs said that the money, which belongs to 2,476 clients, should be repaid according to procedure, i.e. as if their deposits were separate and each of them qualified for a guaranteed repayment of €100,000.
Due to this, and a sting of other complaints from residents, Rīga Mayor Oļegs Burovs (Honor to Serve Riga) sacked now former RNP Board Chair Aivars Gontarevs in November of 2019.
Shady lift procurement
“I just had a letter from “ Schindler ” on my desk about them losing a procurement. A professional company, global level loses a lift servicing procurement to a company that was recently created,” said Burovs.
At the end of last year the Mayor said that he is ready to speak to the Corruption Prevention and Combating Bureau (KNAB) about the 8.3 million euro RNP lift service procurement contract won by newly formed “Liftu alianse”. Babkins was detained after his company’s offices were searched.
Previously reported in 2018, one person admitted to being guilty in a case in which about €150,000 was defrauded from the RNP through fake job contracts. A review by the State Audit Office found that from March 2014 to April 2015 twelve people might have been employed fictitiously at the municipal housing manager. They are alleged to have been paid without doing any job.
The audit office found that a great chunk of the wages paid to the people who were allegedly employed fictitiously had been earmarked as expenses for managing residential properties, meaning that regular residents may have shouldered the losses. The department where the employees were working was shut down shortly after the State Audit Office started looking into the goings-on at RNP.
Several of the employees at the department were linked to Harmony council members as well as MPs. For example, Riga councilwoman Svetlana Savicka had received €17,994 from RNP in 2014. Furthermore, the wives of two Harmony members were found to be working at the shut-down department.