Police probe dodgy diesel deal

Take note – story published 7 years ago

The Latvian Economic Police have started a criminal probe into a project providing for the modernization of six diesel trains for €22 million, the Panorama evening news program of Latvian Television reported.

In August, the Economic Police launched an inquiry into the train upgrade project, carried out by the Pasazieru Vilciens rail passenger carrier, but in October a criminal investigation was started into violations in state institutions and crimes against property, representatives of the State Police told Latvian Television.

The decision to launch the criminal investigation was taken because without it the law enforcement authorities would not be able to gather all the necessary information, such as bank documents.

Pasazieru Vilciens was not informed about the criminal probe, but the company’s representatives said that cooperation with the police had been taking place as part of the earlier inquiry.

There are no named suspects in the case yet, but it follows from the TV report that the responsibility of the rail company’s management and Transport Ministry officials will be assessed as part of the probe.

As reported, KPMG Baltics recently said that an audit of the project found that not all risks were taken into consideration during the project preparation stage, and there were shortcomings in procurement documents. Also, part of the EU funding was lost because of delays during the project’s implementation.

As reported, Pasazieru Vilciens on September 19 received the last modernized diesel trains, thus, the project on upgrading 19 diesel trains co-financed by the EU Cohesion Fund has been completed.

The total project cost reached almost €22 million, including €9 million co-financing from the EU Cohesion Fund, and €1.5 million co-financing from the state. Pasazieru Vilciens' own investment in the project exceeded €11.6 million, although companies modernizing the trains had to pay contractual penalty of €2.2 million for falling behind schedule, thereby reducing the amount of Pasazieru Vilciens' investment.

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