A large part of society was shocked this week by news about an “RB Rail” procurement for liability insurance for officials against various failures and omissions. These insurance policies would apply retroactively and would also cover the spouses of former and current officials. Another story that has struck a nerve with the public concerns austerity, which ministries claim to be observing, while at the same time generously awarding bonuses to their employees. How acceptable is officials’ liability insurance, and what is really happening with the austerity regime? BNN asked Filip Rajevskis, co-owner of the company Mediju tilts and a political scientist.
“This is not only about ‘RB Rail’ – the liability of board and supervisory council members of all state-owned companies is insured. This is nothing new; it’s just that in the context of ‘RB Rail’ the issue came into the public spotlight,” the political scientist says. “There is no problem with insuring decisions; it only benefits the state as a shareholder. Because if board or council members of state-owned companies make a mess, in most cases they are simply unable to pay for it themselves. Therefore, such liability insurance is not a bad thing,” Rajevskis explains.
However, there is also a “but” here – as Filip Rajevskis stresses, the question is whether such insurance should be paid for with the company’s money or by these individuals themselves. “Insurance costs can also be part of a remuneration package and should be taken into account when talking about board members’ pay. Otherwise, it turns out that we pay for everything and, since by law they are responsible for everything, we also insure these board and council members. There can be a different view on all of this.”
Asked whether this liability insurance could lead to genuine feasts of irresponsibility in the governance of state-owned companies, Filip Rajevskis answers in the negative.
“If there are criminal offences involved, insurance does not solve that.
It’s not as if an insurance policy releases someone from liability. By its philosophy and essence, insurance protects a person against accidents, against something unintentional. For example, if you insure a house and then burn it down yourself, the insurers will take you to court for insurance fraud. The same applies here – if a person has deliberately caused damage through their actions, for which the insurer then has to pay, that does not mean they are freed from everything. Both the insurers can come after them, and if the damage was caused intentionally, there is also criminal liability. So the main question is whether such insurance should be considered part of remuneration.”
The topic of money also includes the widely publicized austerity regime. Have we really been tightening our belts in public administration, or was it just talk?
Filip Rajevskis emphasizes that the austerity issue raised last year is a fairly blatant manifestation of legal nihilism. “On the one hand, decisions are adopted; on the other, they are simply crudely ignored. And then someone says that we as a society must comply with laws and decisions, while the state itself is unable to ensure that state institutions and officials comply with decisions adopted by the government and the Saeima! This nihilism comes back to bite through distrust in the state, the government, and the Saeima. Because how can you trust people who say one thing while in reality something completely different happens, with no consequences whatsoever and no one being held accountable? Everyone pretends that such austerity decisions were never even adopted.
This is a very nihilistic attitude toward society.”
Answering BNN’s question as to whether any state institution employees might have to part with their comfortable chairs due to excessive spending, the political scientist says that no one will lose their job for failing to comply with these government decisions, and there will be no sanctions against anyone.
Asked how Latvia will deal with the losses caused to the state by “Rail Baltica” and “airBaltic,” the political scientist says he would like to challenge the thesis regarding the national airline, because “airBaltic” may incur certain direct costs, but it does not generate losses. “The difference between ‘Rail Baltica’ and ‘airBaltic’ is that ‘airBaltic’ carries millions of passengers, flies, brings people – including countless tourists – to Riga, and fills the airport. The fact that there are some costs does not mean that we as a state are in the red. I believe that with ‘airBaltic’ we are major beneficiaries and that the state, our economy, and society are in the black. You can be convinced of this by talking to Estonians or Lithuanians, who do not have their own strong airline. So I do not agree with the thesis that ‘airBaltic’ is a company that brings losses to the state.”
“As for ‘Rail Baltica,’ the Prime Minister has already stated that someone must be held responsible for the pier in the Daugava and other issues. However, this government is incapable of creating real consequences and actually solving problems. Just as everyone ignored the government’s austerity decisions – including the government itself – everyone will also ignore these statements by the Prime Minister about responsibility,” Rajevskis concludes.
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