TV3 programme Nekā personīga has dug deeper into the report composed by the State Audit, specifically the section regarding how the Ministry of the Interior’s Provision State Agency has overpaid EUR 7.5 million for rent of the office building in Čiekurkalns.
The State Audit notices legal nihilism in the behaviour of state company Valsts nekustamie īpašumi (VNĪ), which is the institution that owns the building in question and charges rent for it.
The latest report from State Audit mentions that the practice of provision of premises to various state institutions is uncoordinated. State Auditor Rolands Irklis explains: «Real estate property management on the side of the state remains decentralised and fractured. The principles that govern management of real estate, their rent, vary strongly from one another.»
After checking several dozen rent contracts, auditors found that not all properties have sufficient savings for repair work. This could potentially cause higher expenditures for the state budget in the future. Bu there are also cases when rent fees bring impressive profits.
The building complex on Čiekurkalns 1st Line is used by the Ministry of the Interior, Office of Citizenship and Migration Affairs, and State Police. Construction of the complex required a loan of EUR 68 million. State Audit reported that use of the complex costs its tenants far too much.
State Auditor: «An excessively high rent is set. It goes as far as 11-12 EUR/m2. What is interesting here is that there are no restrictions there.»
He rent for the complex is paid by the Provision State Agency of the Ministry of the Interior. The State Audit concluded that the institution pays too much. According to State Audit, the amount overpaid for rent paid for the complex located on Čiekurkalns 1st Line was EUR 2 776 361 in 2018, EUR 2 793 064 in 2019, EUR 992 362 in 2020 and EUR 1 025 418 in 2021. This amounts to EUR 7 587 205 in four years.
Interest rates included are much higher than the actual ones. In 2020, when rent was reduced slightly, the Provision State Agency still paid more than the bank’s interest rate, as concluded by State Audit.
State Auditor: «We are well-aware of the state of many real estate properties of the interior sector. Police departments remain disorganised.
In many cases police officers are forced to work in inappropriate conditions.
On the other side, we can see the interior affairs sector overpays every year, which provides significant profits for Valsts nekustamie īpašumi».
VNĪ board member Andris Vārna explained:
«We do not agree with this accusation. This [interest] rate is charged. While it was low at the time, it was then. If the audit were performed today, from 2023 onward, the accusation would be in the other direction. I would show we haven’t taken enough. We as a loan taker have to form savings to equalise them in the long term.»
[Nekā Personīga]: «Shouldn’t there be a unified approach [for calculation of rent]?»
Looking to the future, there needs to be a unified approach. But this is something that was taken over historically, and we have to act as an honest manager. We have to act in a way to avoid causing losses for the state or the company.»
VNĪ representative also mentioned that during Covid-19 private businesses were given lower rent fees. VNĪ also paid almost EUR 2 million from its own budget.
Both the Provision State Agency and VID told the programme they are in the process of reviewing State Audit’s report and will decide on action once the review is done.
The State Audit outlined the management of VNĪ – specifically the council. Three out of four council members are temporary representatives. Two of them have been performing their duties for four years. The law permits appointment of temporary representatives for a period of up to one year.
The State Audit calls this legal nihilism, as it weakens public trust in state administration. All members of the council also serve full-time in ministries and state companies.
Also read: Latvian State Audit’s report shows State Real Estate is an «inefficient» institution
«Nihilistic» VNI charges excessive rent to interior services and State Revenue Service
