Atslēgvārdi:

Knights of the Table 9

Normally, I don't like it when people say that "the facts speak for themselves". However, this is one of those extremely rare instances when they do. Here is a collection of copy&paste passages from the judgment from the British Commercial Court, a case between Antonio Gramsci et al and Recoletos Limited and Others (the identities will become apparent soon).

Iesaki citiem:

"...this evidence must, unavoidably, be set out at some length; it provides a fascinating glimpse of corporate and, perhaps to some extent, political rivalry in Latvia in recent years." [VD: the judge himself seems to be thrilled by this case] I start with the evidence of Mr. Martins Kveps ("Mr. Kveps"), a Latvian lawyer and Chairman of the Supervisory Board of AS Latvijas Naftas Tranzits ("LNT") and Deputy Chairman of the Supervisory Board of AS Ventbunkers ("Ventbunkers"). Mr. Kveps says that Ventbunkers was, until 2006, the central company in the Ventspils Group. Mr. Kveps acts for four of the five beneficial owners of the Ventspils Group…"

"Mr. Kveps went on to describe the "background and political history" of the Ventspils Group. Geographically and for purposes of trade, Latvia's location places it between "East" and "West". Ventspils is the largest ice-free port city of Latvia, after Riga itself. Following independence from the USSR in 1991, the Ventspils port with its developed infrastructure quickly became the most important transit terminal for the transhipment of Russian oil and oil products, potash, coal and other cargoes. But in 1991, the Ventspils port infrastructure was owned by state-controlled companies. Senior managers of these companies, led by Mr. Lembergs, the Mayor of Ventspils since 1988, gradually privatised these "strategic assets", so forming the Ventspils Group. That Group became not only economically and financially strong but was also, as Mr. Kveps put it, "politically very well connected"."

"Turning specifically to LSC [Latvian Shipping Company - VD], the announcement that it was to be privatised came in 2002. A confidential agreement was entered into between the Ventspils Group, then led by Mr. Lembergs and the so-called Riga Group, led by a Mr. Andris Skele (" Mr. Skele"), said by Mr. Kveps to be one of the wealthiest individuals in Latvia; he has served two terms as Prime Minister. The agreement provided for joint ownership of the LSC by the Ventspils Group and the Riga Group. For this purpose, two Guernsey companies, Ojay Limited ("Ojay") and Eastgate Properties Limited ("Eastgate") were incorporated. They were each 50% owned by Regina Development Limited ("Regina"), owned by members of the Ventspils Group and by Lake Street Investments Limited ("Lake Street"), owned by the Riga Group. The intention was that these two companies would become the controlling shareholders of the LSC after privatisation."

"However, ... the Ventspils Group and/or Mr. Lembergs reneged on this understanding. Instead and as is apparent from the structure chart, Ventspils Nafta acquired a controlling stake in the LSC (a 49.9% shareholding), leaving Ojay and Eastgate with a 27.55% shareholding. As Mr. Kveps does put it, Mr. Skele was "not surprisingly, furious". Thereafter, the Ventspils Group and the Riga Group made unhappy bedfellows, so to speak, as shareholders in the LSC.

"Against this background, the Ventspils Group wished to buy out the Riga Group's interest in Ojay and Eastgate, the vehicles through which the Riga Group held its shareholding in the LSC. But, as Mr. Kveps expressed it in his first affidavit, it was necessary to find a purchaser appearing to be independent of the Ventspils Group; otherwise, the combination of the 27.5% and the 49.9% shareholdings would have required the Ventspils Group to bid for the whole of the LSC. …as Mr. Kveps later put it: " ....the purpose of the Charters was to raise money for the purchase of Ojay….and Eastgate….and it was for the benefit of the Ventspils Group and the LSC to resolve uncertainty within the LSC as to its ownership.""

"Mr. Kveps went on to say this. ...all the relevant companies, including LSC, were controlled "not by the official institutions, such as their respective Management Boards or Supervisory Boards" but by "an informal gathering" of the individuals behind Ventbunkers and LNT called "the Table". The informal group, or gathering, was comprised of about 12 individuals and included Mr. Lembergs and the other four beneficial owners of the Ventspils Group, whom Mr. Kveps represents. Mr. Lembergs chaired the meetings of the Table, which took decisions on all important matters affecting the Ventspils Group, including LSC. The formal governing bodies of the companies in question would then "merely implement the decisions taken during the Table meetings."

"Until 2004, Mr. Lembergs was a very powerful man, with effective control of the Table…"

"In or around 2004, tensions developed between Lembergs and the other four beneficial owners of the Ventspils Group, who, as the structure chart reveals, enjoyed majority control (4/7 to 3/7) of their interests in Ventbunkers, LNT, Ventspils Nafta and LSC. A power struggle ensued… there has been what Mr. Kveps calls a "major falling out" between his clients and Mr. Lembergs."

Here is the link to the whole court judgment.

To conclude, let me provide some more quotes - this time from a confidential agreement between "V" and "S", that was found by KNAB (anti-corruption agency) in 2007. It was widely understood that "V" represented "Ventspils Group", and "S" - social-democratic party. My unofficial translation from Latvian.

"2.3. V commits to provide project financing to S of ??? 000 LVL a year…" [ precise amount purged by KNAB - VD]

"3.3.3 [S obliges to] act againts privatization of large enterprises (Latvian Shipping Company, Latvian Railroads, Latvijas Gaze, Latvenergo, Lattelecom) that would involve a strategic investor [i.e. a foreign company - VD]; in these questions S must consult and harmonize its opinion with V" [emphasis added]

"3.3.4 In the privatization process widely use privatization certificates as means of payment".

Yes, that's precisely how it works.

Iesaki citiem:
Creative commons c6ae3e51884b139b45a669ce829ac99646bf0ceb328fc95963f1703a58a032d0 CREATIVE COMMONS LICENCE ĻAUJ RAKSTU PĀRPUBLICĒT BEZ MAKSAS, ATSAUCOTIES UZ AUTORU UN PORTĀLU PROVIDUS.LV, TAČU PUBLIKĀCIJU NEDRĪKST LABOT VAI PAPILDINĀT. AICINĀM ATBALSTĪT PROVIDUS.LV AR ZIEDOJUMU!

Komentāri (9) secība: augoša / dilstoša

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Komentētājs

KasparM 15.06.2010 10:59
Thanks, Mr. Streips, for summing it up.

I guess my feelings are equally agnostic to Anonymous. It is all about trust. For me the elections seem pointless because I don't know anyone who a reasonable person could really trust to give his vote to.

Maybe it is because people in the Latvian society by nature are less trustful to each other. However, in general I trust people I deal with daily; I trust my landlord that he will provide me the apartment and facilities as long as I am paying the rent. I trust the bank that it will not lose my money, I trust the shopkeepers that they will not try to cheat me; I even trust the police that they will protect my interests at the time of need. While I am not terribly happy with their services and even though occasionally they foul up, there is certainly a great deal of trust involved.

I can also relate to most political issues, for example, the latest controversy if the pharmacies should be owned only by licensed pharmacists or not. I have no strong opinion but I can see the merits on both sides so I could make my mind if I were asked. But when it comes to our leaders there is a complete disconnect – I don't have even the slightest idea if anyone can be trusted, they all seem less honest than regular people and business persons around. While I accept that someone should be governing our country and desirably democratically elected instead of some dictator but I don't see how my participation (I vote occasionally) can have any good effect in the democratic process if I trust nobody on the ballots?

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anonymous 14.06.2010 18:06
As I said, I do not believe in anything. On this subject – I am agnostic. But I read now and then blogs and columnists, i.e. I really just "hear a few things in the pub"…

It is nice that we now know the ownership structure of LK (which was pretty clear also before). Who controls Goldman Sachs, who controls JP Morgan we simply do not know (as I said, I have not been much into the subject, maybe they are completely transparent – pls drop a link), - those should be human beings, you know, and they were all bailed out with taxpayers money (Parex bailour was more transparent in this sense)… to what extent the big banks coordinate their actions we also do not know, we sometimes hear about some CEO luncheons... Indeed, ignorance is bliss…

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hmm 14.06.2010 17:36
''I only note one thing: in all Western countries, especially Anglo-Saxon, the public perception that their democracies are degenerating into simple third world style oligarchies is very much growing…''

do you have any evidence for this, say opinion polls ect.? Is Australia, where the economy is bouncing back quite strongly, turning into a third world country? do you have any evidence for anything you believe or do you just hear a few things in the pub and post them online.

the fact is that until this court case linked to in the blog there was no public evidence anywhere of what the actual ownership structure of these companies were, how you can compare that situation with goldman is beyond me. there is a difference of an order of magnitude there.

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anonymous 14.06.2010 17:29
Sure, Lembergs and Shkele are also taken to courts and beaten publicly. So what? To be frank, I have no intention to argue, as those issues are so long-term that probably the jury is still out on this... and will be for the next 100 years. So, everyone may believe in whatever he/she wants. I only note one thing: in all Western countries, especially Anglo-Saxon, the public perception that their democracies are degenerating into simple third world style oligarchies is very much growing…

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hmm 14.06.2010 17:02
so you're comparing the above, which is a dispute among shareholders who control the company through offshores, with goldman sachs a company that has taken a beating publicly in the U.S. and is being sued by the SEC and private investors, one that had its CEO hauled before Congress to be questioned publicly about various deals? or AIG which is now controlled 80% by the state after they took it over and is having subsidaries sold off to repay the bill?

I fail to see how democracy ``naturally degenerates'' to oligarchy. Was Latvia a state with a long history of democracy when the oligarchs took over? or was it instead that oligarchy took root in Latvia and Russia when democratic institutions were weak?

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anonymous 14.06.2010 16:19
Sure, but let us not be too emotional. Probably, crony capitalism has simply won and become the dominant trend all over the world. This crisis illustrated it explicitly. How “transparent” are all the bailed-out goldman sachs and aigs, meeting regularly at secret luncheons and filling with their former employees all key government positions? Of course, we should fight against such things but probably it just the other side of the democracy coin and that is what a democracy naturally degenerates to: oligarchy. That is not a new insight, Greeks, I remember vaguely, knew it for sure but we tried to prove them wrong. Probably the relatively successful after-WWII period was just a short detour, an exception, with natural dynamics towards oligarchy inhibited by the communist competition.

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Kārlis Streips > KasparM 14.06.2010 08:20
Here would be my two or three sentences: The development of Ventspils and "Ventspils" over the last 20 years (I differentiate between the actual town and the concept that it has come to represent) has been conduced by dishonest people via myriad offshore companies, secret meetings, secret alliances, secret promises, etc. In short, no one is lovely and fluffy in this story, but the fact is that some participants were much, much worse than others, and two of them are being proposed by their political parties this year to become prime minister. To me, this adds up to "banana republic." Minus the bananas.Kārlis Streips > KasparM 14.06.2010 08:20
Here would be my two or three sentences: The development of Ventspils and "Ventspils" over the last 20 years (I differentiate between the actual town and the concept that it has come to represent) has been conduced by dishonest people via myriad offshore companies, secret meetings, secret alliances, secret promises, etc. In short, no one is lovely and fluffy in this story, but the fact is that some participants were much, much worse than others, and two of them are being proposed by their political parties this year to become prime minister. To me, this adds up to "banana republic." Minus the bananas.

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Kaija 13.06.2010 21:22
Lieliski! bEIDZOT KAUT KAS no Latvijas paralēlās politikas sāk uzpeldēt.

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KasparM 13.06.2010 15:39
After reading all this I still have no idea what these facts mean and why they are important to me, a casual reader? Could you please express the main idea in two or three sentences for the benefit of us all?

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