Rīgas Satiksme needs €37m in March to escape insolvency, says Matīss

Rīgas Satiksme municipal public transport company may face insolvency in March without new €37 million subsidies, said Rīgas Satiksme acting CEO Anrijs Matīss in an interview with Ir magazine this week.

The city’s budget has not yet been adopted, therefore municipal companies receive one 12th of last year’s basic budget monthly, and in the case of Rīgas Satiksme it is €8.35 million, which is about €100 million a year. “We cannot live with this budget,” said Matiss, adding that at least €137 million a year would be needed for the company to survive, including €16.7 million already in March.

Ernst & Young has conducted an audit in Rīgas Satiksme. Matiss said that the auditors’ report show that about €6 million have been overpaid in a fuel procurement with a company whose owners are hidden in offshores. The loan granted for purchase of trams has been spent on wages. 40 percent of money collected from fares have been spent on wages. Matiss is not yet ready to publish the auditors’ findings yet, but plans to initiate a number of court proceedings based on these facts.

The Rīgas Karte company, maintaining the e-ticket system, parking meters and terminals at school canteens where pupils use their e-tickets to receive free lunches, has been the most expensive spender. Rīgas Satiksme last year paid €27.7 million to Rigas Karte, and the sum is growing. Rīgas Karte is linked with Honor to Serve Riga member Aleksandrs Brandavs.

Brandavs is the true beneficiary in another company pumping money out of Rīgas Satiksme – Rigas Mikroautobusu Satiksme (RMS), providing minibus passenger service in Riga. According to the new agreement that came into force on December 1, 2018, Rigas Satiksme pays RMS €1.34 for every carried passenger, while RMS repays money collected from fares to Rīgas Satiksme, and the price of the ride is €1.15.

Auditors also discovered that a part of the €50 million loan granted to Rīgas Satiksme by SEB Banka for purchase of 20 low-deck trams has been used on wages. The temporary board at the end of last year demanded additional €17 million in subsidies from the Rīga City Council to replace this money.

About €3 million have been overpaid for fuel in 2016 and 2017 to RDZ Energy company whose owners are in Malta and the Virgin Islands.

“This is not a joke,” Matīss said about the situation in the company, adding that there will be court proceedings initiatied and the company will go through some changes.

Later on February 28 an irate Matīss told the press that he's seriously considering to step down as acting head of the company.

"I'm not the one to clean up all the mess that has been made [at the company] over the past umpteen years," he said.

But after meeting mayor and party mate Nils Ušakovs (Harmony), Matīss backtracked and said he has received shareholder support – the shareholder is Ušakovs himself – and will continue work at the company.

"We'll keep on working. The first priority is that the company stays operational. So that Rīgans continue to have public transportation. The agreement is that the funding will be found and possible obstacles overcome," said Ušakovs. 

As reported, there's an ongoing corruption probe about possible graft at the Rīgas Satiksme transport company over companies allegedly winning tenders by bribing Rīgas satiksme and Rīga City Council officials. 

(Updated February 28 with the final five paragraphs.)

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