The Valmiera industrial and export park project has come to the attention of European prosecutors. In the territory of the former meat processing plant, the municipality has bulldozed unwanted buildings, improved infrastructure, and is building a new production plant where armored vehicles will be assembled. The activities surrounding the building have also drawn the interest of investigators.
What is the alleged crime, is not made clear. However, indications suggest investigators are interested in the building's rental auction and adapting the structure to the tenant. LTV states that several sources have drawn De Facto's attention to the possibility of receiving more money from the funds, up to 85%, if the end-user of the built infrastructure is not known and is selected by open tender. However, if an object is built for a particular merchant, the co-financing is considerably lower – 45% or 55% – and more needs to be invested by the enterprise itself. Valmiera got closer to the upper limit.
One of the lines of the investigation could therefore be whether the municipality has hidden information when implementing the project.
In July, a tenant was found at auction for the production building – Defence Partnership Latvija, which will produce Finnish armored vehicles “Patria” for the Latvian Army.
“I absolutely deny the allegations that have been made about illegal activities with European Union funds,” Valmiera Mayor Jānis Baiks, who has been the subject of criminal proceedings, said. He cites a recent letter from the Central Finance and Contracting Agency (CFLA), an institution subordinate to the finance minister that monitors the use of funds. The agency has not found that the new production building was tailored to any particular merchant.
“That's all on my part, I can't say anything more right now. I trust the institutions we have always worked with. We have done everything according to the instructions of the responsible state institutions,“ Baiks said.
When asked the other questions related to the fund project, Baiks responded that he could not disclose the information because investigators had banned him from talking about the specific case. While the mayor says the municipality is not accused of having received too much money, he does not specify the substance of the matter.
Also when asked if he knew who would be the winner before the tenancy auction, Baiks replied that “there will be no comment at this time about it.”
The head of Defence Partnership Latvija head Uģis Romanovs previously revealed to LTV that KNAB is a witness in criminal proceedings. He referred De Facto questions to the parent company in Finland, the largest owners of which are the Finnish and Norwegian governments.
Patria chose to reply in writing: “Defence Partnership Latvija was responsible for finding new premises for Patria production in Latvia and obtained rental rights from Valmiera municipality at a public auction this year. Local authorities said at a briefing last week that some representatives of the city of Valmiera had been heard in connection with an investigation affecting the industrial park project. Accordingly, two representatives of the leadership of Defence Partnership Latvija were also interviewed. From the point of view of Patria, the procurement process follows local legislation and both admissibility and transparency have been approved by an external expert. No claims have been made against Patria.”
The armored machinery manufacturer says it had not entered into any agreement with the local authority before the lease was auctioned. It is true that Cabinet of Ministers regulations provide that project applicants must submit a certification regarding the interest of merchants at an early stage.
The subsidiary of Patria in Latvia agreed to pay nearly EUR 15 thousand per month or EUR 14,966.70 plus value-added tax (VAT) to the local government for the lease of the production building. Neither Baiks nor the municipality disclosed how many bidders participated in the auction because it was not information to be made public.
The CFLA has suspended payments to Valmiera municipality until the investigation is complete. This usually doesn't happen quickly, so completing the nearly €7 million industrial park will require the City Council to look for money elsewhere.
