De Facto

LIAA atbalstītam baltkrievu uzņēmējam kriminālprocess VDD

De Facto

(Zīmju valodā). DeFacto

Līvānos jauna ERAF krimināllieta: iela uz SPA... graustā

EU fund fraud case launched in Līvāni, Latvia: LTV's De Facto

Several investigations into suspected European Union (EU) money fraud have involved production buildings in industrial parks, where it has been suspected that projects were aimed at specific entrepreneurs. Latvian Television's De Facto broadcast, aired October 8, reports on a new criminal case in Līvāni, where, on the contrary, it could turn out that no business needed repairs to the streets in question.

Seven years ago, the Līvāni municipality council had devised to sort out one of the main streets of the city – Dzirnavu Street. In order to implement this project, the City Council submitted a project “for the development of infrastructure important for entrepreneurship” in order to qualify for co-financing from the European Regional Development Fund or ERDF. The objective of this program is to increase the volume of private investment in regions by investing in business development. Therefore Līvāni Council envisioned that this investor, for the benefit of which the street is being rebuilt, could be the Līvāni peat factory located in Rožupe Parish.

In a Facebook video recorded on Dzirnavu Street shortly before the local elections in May 2021, Mayor of Līvāni Andris Vaivods (For Development of Latvia) said of the project: “[..] We put the emphasis on the peat factory. And at that point, as I said, it was accepted and we started that project. But this letter came from the European Commission that in the middle there are six kilometers of national road that should not be put in, and we need to think right now where this investor might be. We found ourselves in a pretty difficult situation.”

As a solution, the municipality came up with a takeover of the state-owned old forestry building. It was 600 meters from Dzirnavu Street, at the end of the unpaved Kaiju Street. The Līvāni City Council received a certification from Jēkabpils Ltd “Trimaļnīki”, which was founded at the time regarding the interest in doing business in this building, creating 6 jobs and attracting investments of at least half a million euros to the property. Based on the interest of this potential investor, Kaiju Street, which runs through the privately owned neighborhood, was also asphalted. Repairs to the two streets cost a combined €800,000, half a million of which came from the ERDF.

After the lease auction, the municipality entered into a real estate lease with Trimaļnīki Ltd in August 2020, but it was terminated at the end of 2021, although Vaivods said publicly a few months before that that the investor was already developing a technical project.

It should be added that currently former construction engineer of the Līvāni municipality council, a long-term Member of several local government commissions Armands Šaraks, operates on the board of directors of “Trimaļnīki” Ltd. Their City Council's former chief executive had already named the Member as the beneficial owner of Trimaļnīki in a service report two years ago.

There has been no other investor willing to rent the property for 30 years to set up a tourist or leisure facility, such as a guesthouse or spa complex, in the semi-collapsed buildings. A month ago Līvani City Council announced the current lease auction as unsuccessful.

If an investor is not found until the end of next year, the municipality will have to pay back the ERDF funds, Mayor of Līvani Vaivods was still optimistic at the council meeting at the end of August. He hopes that the situation in the tourism sector, which was affected by the Covid-19 and war in Ukraine, will improve, and maybe the deadline for implementation of the project will be extended.

However, a new twist has taken place since the meeting of the Līvāni City Council in late August. According to information available to De Facto, it is known that the State Police Economic Crimes Combating Administration launched criminal proceedings “for alleged fraudulent acts” on the part of the local government in mid-September in connection with the street restoration project. The police confirmed the fact, saying they would refrain from further comment because the investigation was active.

The case was forwarded to the police by the European Public Prosecutor's Office, or EPPO, according to information at LTV's disposal. In response to a submission, the EPPO concluded that the main allegedly fraudulent activities enabling the municipality of Līvāni municipality to qualify for public funding under the project took place before the entry into force of the Regulation establishing the EPPO in November 2017. As a result, European prosecutors themselves are not entitled to investigate the case, so the material was sent to police this summer.

The management of the Līvāni Municipality Council did not provide an interview on the street project. Chairman of the City Council, Mayor of Līvani Andris Vaivods is “on sick leave”, while his deputy Ginta Kraukle was on a mission in Riga, but said by telephone that no official information from the State Police regarding the new case has been received by the city Council of Līvāni. However, at the end of September, during a meeting of the Līvāni City Council regarding the organization of another auction of rental rights in Kaiju Street, the opponent Valdis Labinskis (Latvian Association of Regions) announced a letter from the police regarding the initiated criminal proceedings.

Implementation of European fund projects is monitored and controlled by the Central Finance and Contracting Agency (CFLA), which confirms that there is currently a strong interest from local governments in how to properly implement business support through infrastructure projects.

"This should be assessed on a case-by-case basis. Because if it were illegal state aid, for example, then we would recover the money with interest from the municipality. If, on the other hand, it was simply a non-successful project, then, of course, we would assess the situation, and the municipality would have to repay the entire amount of that project. But if there were signs out there that it was some kind of deliberate act with a desire not to actually realize the project but to get the money, well then that's an issue that certainly law enforcement would have to watch - we couldn't detect that,” said CFLA spokeswoman Gundega Šulca.

The Prosecutor of the EPPO Gatis Doniks also calls on local authorities to be sensible when applying for projects, such as to critically assess formal assurances of interest from companies that will obviously not be able to invest the necessary amounts or create jobs.

Doniks also pointed out another problem:  “We also see and feel this approach - a lighthearted attitude in developing serious economic projects, serious projects that can hit national security itself in our current geopolitical situation. [..] If the potential investor is known, it has to be attached legally and all supervisory institutions must be informed. If it is not done, the action is unlawful."

Seen a mistake?

Select text and press Ctrl+Enter to send a suggested correction to the editor

Select text and press Report a mistake to send a suggested correction to the editor

Related articles


Most important