Latvia’s Prime Minister Krišjānis Kariņš has ordered Ministry of Agriculture to evaluate the report ordered by the Cross-Sectoral Coordination Centre (PKC) from KPMG Baltics about the compliance of Latvian State Forests (LVM) with good corporate management principles in board and council member selection, as reported by the PM’s office.
The report mentions that there were deviations from PKC guidelines in council member selection, as well as certain actions that affected results of selection procedures. PKC is now tasked with improving regulations that govern the selection process of candidates to become board and council members at state capital associations.
At the same time, LVM council chairman Edmunds Beļskis said he is glad that,
according to the report, the nomination process of the company’s board was legal,
compliant with regulations, and there were were no violations of regulations. As for PKC guidelines, which are recommendations mostly, LVM council believes it would be a good idea to make them more comprehensive and applicable for similar purposes in LVM and other businesses without room for interpretations.
As for the fact that no all decisions during the nomination process were made unanimously, LVM council said four out of seven members of the nomination committee were independent members representing various sectors and organisations. This is why it is normal for different members to have different opinions, said Beļskis.
At the same time, LVM council proposes holding discussions with PKC regarding prevention of subjective opinions and criteria in order to ensure neutrality of all committee members and exclude influence of subjective and personal opinions in decision-making.
Beļskis said LVM council will cooperate with PKC and other involved sides in order to discuss possible measures to help reduce excessive bureaucracy. ‘For example, there was a proposal voiced – compose longer minutes from committee meetings. It caused a shock because a representative nominated by PKC participated in all meetings of the committee. This representative did not voice any objections or proposals in regards to minutes of meetings. No objections were voiced by any other independent experts.’ LVM council has also studied results of the evaluation published by PKC, said Beļskis.
As previously reported, PKC ordered KPML Baltics audit company to perform an evaluation of LVM’s board and council member nomination process and its compliance with regulations and good corporate management principles. Though no breaches were found, there were deviations from guidelines and recommendations.
Latvijas Radio previously reported that there were suspicions about the compliance of approval of LVM board chairman Pēters Putniņš and board member Toms Reiziņš with requirements of the selection process, specifically the requirement for candidates to have spotless reputation, as well as their previous professional activities.
There were also concerns about certain decisions of the committee and overall secrecy of the procedure, which was previously outlined by US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). The State Security Service previously interviewed Putniņš about these aspects and his previous management experience, explained Beļskis.
A total of 51 candidates signed up for the LVM board and council member selection process. A personnel selection company was hired to evaluate candidates. After most candidates were rejected, the ones that remained were evaluated by a specially composed committee. It included representatives from LVM council, Ministry of Agriculture, PKC, Latvian Chamber of Commerce and Industry, Baltic Institute of Corporate Governance.
Latvian state is the sole owner of LVM. The Ministry of Agriculture is the state-appointed shareholder.