Competition watchdog fines Rīga Transport €2.4m in "nanowater case"

Latvia's competition watchdog, the Competition Council of Latvia, has imposed a fine of €2.4 million on Rīgas satiksme municipal transport company, as well as a much smaller fine on another company for bid rigging in the so-called "nanowater case".

The Council told the press April 24 that it had earlier started an investigation after receiving information from the Economic Crime Combating Board of the State Police. The council thinks that in total six market participants, supported by the organizer, have coordinated their tenders in two price quotations, carried out from 2012 to 2014 with the total contract sum exceeding €800,000.

The Council says applicants coordinated participation conditions and documentation to be submitted in both price quotations, and also agreed on the planned winner. 

It is alleged that Rīgas satiksme was responsible for purchase of the specific product, actively engaged in the preparation and coordination of tenders, and preliminary determination of the winner. The involvement of Rīgas satiksme, the Council says, is also confirmed by the fact, that the applicants were mutually informed about participation in price quotations before announcement of these procedures.

“Competition imitation and no management whatsoever – this is how the price quotations organised by Rīgas satiksme in this already notorious nano-water case can be described. The official appointed by the organizer, and six applicants abundantly wasted money of residents of Riga worth almost one million euros during these bid-rigging transactions. This is very rude and negative conduct not only from the perspective of the competition law, but also in terms of the attitude of the municipal company towards public funds entrusted to it," said the Council's chairwoman Skaidrīte Ābrama. 

For deliberate competition distortion, the CC imposed a fine of €2,417,000 on Rīgas satiksme and €700 on the Sava arhitektūra company. Since other bid-rigging participants have been liquidated, no fines are imposed on the other five companies involved.

Last year, a court overturned a €2.2m fine by the competition watchdog on Rīgas satiksme over agreements with a minibus operator. 

The so-called nanowater affair deals with a rigged procurement tender organized by several Rīgas Satiksme officials in 2012, which awarded a contract for the supply of "nanotechnological chemicals" to Rīgas Satiksme by a company established specifically for carrying out the scheme. Instead of chemicals, the company was delivering water to Rīgas Satiksme, but no one bothered to look into the matter until early 2015, when TV3 investigative program Nekā Personīga (Nothing Personal) first reported about what later became known as the nanowater affair.

The "nanowater affairs" will be heard by the Riga Vidzeme District Court on May 27, 2019. Four persons have been charged in this case – former Rigas Satiksme employee Vjačeslavs Stunžāns, "nanotechnological chemicals" supplier Aleksandrs Bezkorovainijs, auditor Valērijs Baškirovs and Vita Baurovska. Three persons have been charged with large-scale fraud and money laundering, and one person in addition has been charged with abuse of authority. The fourth persons is charged with fraud and money laundering.

Even though Rīgas Satiksme has been recognized a victim in the case, it has not claimed any compensation. The estimated loss to Rīgas Satiksme is €482,060 in one transaction and €352,182 in the other transaction.

Late last year, police searched the offices of Rīgas satiksme in connection with the case, which is separate from the large-scale graft accusations against company reps and city council officials over rigged transport tenders. 

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