Public transport company Rīgas satiksme, which receives grants from the municipality, owes the Latvian state EUR 14 million and is ordered to pay this amount back, as reported by TV3 programme Nekā personīga.
This financial shock to the company appeared after the violations uncovered by Latvian State Revenue Service (VID) for the period of time when political parties Harmony and Honour to Serve Riga were in the ruling coalition in Riga.
VID believes Rīgas satiksme and its partners participated in tax evasion schemes that caused considerable damages to the sate budget. The decision to enforce the damages has yet to come to force. It has been appealed with VID director general. The outcome will become known in two months, as reported by Nekā personīga.
Journalists remind that VID commenced inspections at Rīgas satiksme as far back as the time when Ušakovs/Ameriks tandem was in charge of Riga City Council. To confirm if there were any deals made, auditors requested information from the sides listed in documents related to business transactions but also tax administrations of ten different countries.
The decision in accordance with which Rīgas satiksme is to back the state scammed tax amount of EUR 14 million is explained on 285 pages.
Rīgas satiksme’s dealings with Rīgas karte
«Two firms, which, according to VID, were shell companies were the ones that involved Rīgas satiksme and French investor Conduent’s owned Rīgas karte in mutual business operations. The maintenance of the e-talon system was brought up from the start to be non-transparent and so that it would be very difficult to follow expenses. Aleksandrs Brandavs, who was a member of Honour to Serve Riga at the time, was at the foundation of the system. Work in Rīgas karte provided Brandavs income of EUR 150 000 annually,» NP reports.
Rīgas satiksme’s subsidiaries BMS Tehnoloģija and Burlat were managed by businessman Andrejs Blažko, who is an associate of Brandavs’. VID belies these companies were intentionally involved in the fictive business scheme or the so-called VAT carousel.
Every year Rīgas karte collected the e-talon system maintenance fee. For comparison, if Rīgas satiksme’s annual revenue from ticket sales was about EUR 40 million, EUR 15 million of this amount went to Rīgas karte.
Rīgas karte’s parent company issued same-amount receipts for services it allegedly outsourced to SIA BMS Tehnoloģija and SIA Burlat. But these companies outsourced the services further down the line to other companies, which were excluded from the VAT register shortly after, NP reports.
VID believes it was no coincidence Burlat and BMS Tehnoloģija and their owners were located on the same address – Raunas Street 5. This, according to VID, made it easier to compose documents detailing non-existent deals. The board member listed almost everywhere was Andrejs Blažko, who has ties to Honour to Serve Riga. The same people worked as accountants for all companies involved.
VID believes BMS Tehnoloģija and Burlat lacked any appropriate resources to maintain the e-talon system. In a mere two years SIA Burlat and Rīgas karte performed business operations worth more that EUR 17 million even though the former had only five employees – none of them were IT specialists. Even French company CBS, which designed, developed and installed the ticket registration system in public transports,
told VID they’ve never heard of Burlat and BMS Tehnoloģija and had never provided any training to any employees from those companies.
Nekā personīga could not get a hold of Blažko. The former board member of Rīgas karte Brandavs refused to comment on the findings of the audit done by VID.
Aleksanrds Brandavs, who served as board member at SIA Rīgas karte from December 2007 to June 2019 and the head of Rīgas satiksme’s Electronic Transactions and Projects Office from May 2005 to March 2019, had only this to say: «I won’t provide any comments. Goodbye!»
The audit also revealed violations committed in the purchase of public transport tickets. Subsidiaries were involved in the process, and Rīgas karte paid five times the actual price for those services.
The audit proved that the yellow smart tickets were procured by Honk Kong-based T-Ursim Limited from Finnish (Confidex OY) and French (Paragon Identification SAS) companies for 10 cents a piece.
They were then sold to Russian UNIMAX OOO for five times the original price – 50 cents a piece.
Then, using a three-company chain in Latvia (SIA BMS Tehnoloģija, SIA Burlat, SIA Rīgas karte), the tickets made their way to the end recipient – Rīgas satiksme.
The true beneficiaries of this scheme were determined in two criminal investigations at VID Customs and Tax police and Corruption Prevention and Combating Bureau.
The audit found that there is no way Rīgas satiksme, which was managed by Leons Bemhens at the time, could not have known about this scheme.
NP points out there was a deal between board members in regards to the organisation of the flow of money.
The impressive fine of EUR 13 822 552 for Rīgas satiksme is for the dealings with Rīgas karte, which VID considers fictive. Rīgas karte was presented an identical fine. In August 2021 the company’s accounts were arrested.
Rīgas satiksme deals with Alkom Trans
Rīgas satiksme is the biggest tramway and trolleybus maintenance company in Latvia. The company employs more than 4 000 maintenance personnel and other specialists. Such an experienced municipal company should have access to comprehensive information about spare parts and supply prices.
In 2013 the company signed a contract with Czech company Škoda Electric for the procurement of 125 new trolleybuses. Three years later another contract was signed with Škoda Transportation for the supply of 15 new low-floor tramways. Latvian company Alkom owned by Aleksandrs Krajčeks agreed to supply spare parts and perform maintenance on the new tramways. The audit questions if guarantees and repairs of new tramways was performed by Alkom, since all work took place within the territory owned by Rīgas satiksme.
Violations with deals involving spare parts are even more blatant. An inspection of receipts and interviews with manufacturers revealed that spare parts such as tachographs, door control modules, tractor engines were sold by Alkom to Rīgas satiksme with a 20% to 50% markup.
VID believes Rīgas satiksme’s business transactions with Alkom were fictive. Auditors are certain Rīgas satiksme was aware of its role in tax fraud schemes.
Contracts regarding procurement of tramways and trolleybuses were signed on behalf of Rīgas satiksme by Leons Bemhens and Igors Volkinšteins. From the Czech side contracts were signed by multiple different officials, including Vladislav Kozak. He and Latvian businessman Māris Martinsons were arrested in 2018 under suspicion of corruption in tramway and trolleybus procurement projects. The business transactions with Alkom Trans detailed in VID audit were added to the ongoing criminal investigation headed by KNAB, as added by NP journalists.
Andrejs Lisenko, chief of the 2nd Office of the 2nd Department of KNAB, comments: «VID auditors do not consider those business deals real. They were unnecessary and the markup we see was unjustified. This means prices were inflated four times their actual value.»
Nekā personīga: «But the search for the end recipient of this difference continues, yes?»
Lisenko: «We are looking where the money went after. We cooperate with other countries in this regard as well. We ask our foreign partners for information about accounts involved in those deals. And we are looking for the end recipient and where the money went, and whether or not it had returned some official in Latvia in the end. We’ve received reports from Cyprus, Poland and the UK. We are still waiting for information from China and Hong Kong».
The programme notes that the aforementioned tax schemes mostly involve people from Honour to Serve Riga or people with ties to former Vice-Mayor of Riga Andris Ameriks. Some of the suspects have since passed away.
Nils Ušakovs, who was Riga’s mayor at the time, was also the shareholder’s representative in Rīgas satiksme during the time authorities are now investigating.
Ušakovs: «I can only say what I’ve heard reported by the media. It is hard for me to imagine for shareholder representatives in any country, municipality or private company could take responsibility for activities involving subcontractors subsidiaries have had dealings with over the years.»
When the criminal investigations commenced at Rīgas satiksme, Ameriks stepped down from his post and Ušakovs was removed from his post by the minister of regional development.
Both Ameriks and Ušakovs ran for the European Parliament and were elected.
Rīgas satiksme owes the Latvian state EUR 14 million; previous city council blamed
