Business NGO: Rīgas satiksme scandal will impact Latvia's reputation

The ongoing corruption scandal in Rīga's satiksme municipal transport company will seriously affect Latvia's reputation and its ability to attract potential investors, said Andris Grafs, the head of the Baltic Institute of Corporate Governance in Latvia.

He said that it's difficult to believe Rīga mayor Nils Ušakovs (Harmony) did not know about what was happening in the company. "In this case Ušakovs led the board single-handedly," Grafs said appearing on Latvian Radio December 17.

Grafs also noted that the city council under Ušakovs chose not to create a watchdog institution over the Rīgas satiksme board at the time when Latvia was encouraged to do so in the process of joining the Organisation for Economic Co-operation and Development (OECD). It should therefore, Grafs said, accept full responsibility. 

"As the shareholder, Ušakovs accepted a system which can turn into a huge corruption scandal. He has both a shareholder's as well as political responsibility. The right step for Ušakovs would be to resign," said Grafs.

Furthermore, Grafs says the scandal will affect Latvia's perception across the world. "This is an international scandal that will affect the ability to attracting funding and investors' perception about the government and municipal sector. It will be difficult," he said.

In other news, a De Facto story dated December 17 revealed that this year Leons Benhems, the former board chairman of Rīgas satiksme and now under arrest during an investigation on possible bribery and profiteering from procurement contracts in the company, was revealed to have received a record-high bonus of €11,500 this year. 

De Facto noted that, for years, Rīgas satiksme has received sizable public funding via the city council but that its inner workings, which for example make up the price of a ticket on Rīga's public buses, remain opaque. 

The Baltic Institute of Corporate Governance is a regional NGO started in 2009. It works to promote corporate governance and is controlled by its corporate and individual members. 

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