Two weeks ago, when the new government was hastily put together in Old Riga, the Corruption Prevention and Combating Bureau (KNAB) detained one of the members of the board of the largest coalition force “Jaunās Vienotības” – the chairman of the Valmiera County Council, Jānis Baikas (“For Valmiera and Vidzeme”). The “de facto” program of Latvian Television (LTV) reports that the investigation is related to whether the municipality fairly obtained generous support from European Union funds for a new production building. Baik has been assigned the status of “a person against whom criminal proceedings have been initiated”.
Two weeks ago, when the new government was hastily put together in Old Riga, the Corruption Prevention and Combating Bureau (KNAB) detained one of the members of the board of the largest coalition force “Jaunās Vienotības” – the chairman of the Valmiera County Council, Jānis Baikas (“For Valmiera and Vidzeme”). The “de facto” program of Latvian Television (LTV) reports that the investigation is related to whether the municipality fairly obtained generous support from European Union funds for a new production building. Baik has been assigned the status of “a person against whom criminal proceedings have been initiated”.
The official announcements of the European Public Prosecutor’s Office and KNAB state that Valmiera municipality officials may have abused their official position and committed illegal activities together with representatives of several companies. This was done so that the municipality illegally obtained more than 4 million euros from the European Regional Development Fund. Six persons have the right to defense in criminal proceedings.
The Valmiera industrial and export park project has come into the focus of European prosecutors’ attention. In the territory of the former meat factory, the municipality has leveled the unnecessary buildings, improved the infrastructure and is building a new production plant where armored vehicles will be assembled. At the beginning of September, the dragonfly festival was celebrated at the new factory. It is understandable that it is the activities around this building that have attracted the interest of the investigators.
It is not clear what the alleged crime is. However, indications show that the investigators are interested in the auction of the building’s lease and the adaptation of the building to the tenant. Several sources, including those informed about the specific case, have drawn “de facto” attention to the fact that it is possible to receive more money from the funds (up to 85%) if the end user of the built infrastructure is unknown and it is chosen in an open tender. However, if the facility is being built for a specific merchant, then the co-financing is much smaller (45% or 55%) and the company itself has to invest more. Valmiera has received closer to the upper limit. Therefore, one of the directions of the investigation could be: did the municipality, while implementing the project, hide important information from the money distributors?
A tenant for the production building was found at an auction in July – the company “Defence Partnership Latvija” (DPL), which will produce Finnish armored personnel carriers “Patria” for the needs of the Latvian army.
“I absolutely reject the statements about illegal activities with European Union funds,” emphasized Valmiera Mayor Baiks at the beginning of the interview, against whom criminal proceedings have been initiated. He cites a recent letter from the Central Finance and Contracting Agency (CFLA), an agency under the finance minister that oversees the use of funds. The agency has not established that the new production building was adapted to any specific merchant.
“Everything, I can’t say anything more from my side at the moment. I trust the institutions with which we have always worked. We have done everything according to the instructions of the responsible state institutions,” says the mayor.
To the rest of the questions related to the fund project, Baiks replies that he cannot reveal the information because the investigators have forbidden him to talk about the specific case. Although the mayor claims that he does not blame the municipality for having received too much money, he does not specify the essence of the matter.
Also, when asked if he knew who the winner would be before the lease rights auction, Baik answered that “there will be no comments about it at this time.”
DPL leader Uģis Romanovs previously revealed to LTV that he is a witness in the KNAB criminal proceedings. He “de facto” referred questions to the parent company in Finland, whose largest owners are the governments of Finland and Norway.
Patria chose to respond in writing: “DPL was responsible for finding new premises for the production of Patria in Latvia and obtained the lease from Valmiera municipality in a public auction this year. Local authorities informed last week that some representatives of the city of Valmiera have been heard in connection with the investigation concerning industrial park project. Accordingly, two representatives of the DPL management were also questioned. From Patria’s point of view, local laws have been respected in the procurement process, and both acceptability and transparency have been confirmed by an external expert. No claims have been raised against Patria.”
The manufacturer of armored vehicles claims that it had not concluded any agreement with the municipality before the lease rights auction. It is true that the regulations of the Cabinet of Ministers provide that project applicants must submit a certificate of commercial interest already at the initial stage.
The subsidiary company of “Patria” in Latvia agreed to pay the local government almost 15 thousand euros per month (14,966.70 euros + VAT) for the lease of the production building. Neither Baiks nor the municipality discloses how many bidders participated in the auction, as this is not public information.
The well-known company “Woltec” in Valmiera was chosen as the builder of the new production plant last year. It is headed by Aleksandars Bimbirulis, the head of the office of two former Presidents. However, halfway through, the builders were replaced. Additional works were announced, which were bid by another company – “PK serviss”. It is explained in the city’s publications that the production building was replaced with metal structures on reinforced concrete – both because the raw materials became more expensive, and in order to increase the load-bearing capacity, because the potential tenants wanted to put solar panels on the roof. The company “Woltec” will return to the finishing works at the facility.
“There will be no comments. Thank you for your enquiry,” stated the head of “Woltec” Aleksandars Bimbirulis, and hung up the phone. There were no speakers in the “Woltec” office either.
In response to the actions initiated by KNAB, the Central Finance and Contracts Agency has suspended payments to the municipality of Valmiera until the investigation is completed. It usually does not happen quickly, so the council will have to look for money in other pockets to complete the industrial park worth almost 7 million euros.
