CER | Latvia: Shipping sell-off still aground

Privatization failure admitted

Latvia's government officially admitted failure in the fourth attempt to sell Latvian Shipping Company (LASCO) and asked the Ministry of Economy to prepare new guidelines for the sale.

The next round of the sell-off may see no requirements for a strategic investor, which would mean dropping several key requirements, including future investments, keeping the firm in the shipping business and limits on reselling it. However, the privatization stake is likely to remain the same, at 68 percent of the company, the Latvian Privatization Agency said.

The new attempt to privatize LASCO is expected to take at least four to five months.

The government had earlier set a starting price of LVL (Latvian lats) 70 million (USD 111.3 million) for the two bidders. Italian company d'Amico Societa di Navigazione S.p.A. had offered USD 22.4 million (LVL 14.1 million) for the 68 percent stake. The second bidder was FAL Oil Company of the United Arab Emirates, which bid USD 70 million (LVL 44.1 million).

FAL said it might take part in another bidding round and possibly increase its offer. Other firms interested in the sell-off were Russia's LUKOIL, Gazprom and Morskije Perevozki, as well as Singapore's Keppel Shipyard.

Two EU negotiation chapters concluded

Latvia concluded talks with the European Union on two major areas last week. The country closed chapters on the free movement of capital and company law, and opened negotiations on financial control and taxation.

Latvia has now closed a total of 13 chapters out of the 31 economic and political negotiation areas. The country has pledged to finish the talks by the end of 2002 in order to join the EU with the first-round candidates.

Kalējs' extradition hearing continues

Extradition of accused war criminal Konrāds Kalējs, now in Australia, moved a step further when a Melbourne magistrate ruled the key evidence of the sole defense witness inadmissible.

Magistrate Lisa Hannan told the Melbourne Magistrates Court that sections of an affidavit by Andrew Ezergailis, a professor of history at Ithaca College, New York, were "vague", "not capable of being tested or rebutted" and constituted hearsay.

Hannan had earlier rejected an argument by Kalējs' lawyer that proceedings should not be based on Australia's extradition laws, but on a 1924 treaty between Latvia and Britain, which would require direct evidence of Kalējs' alleged acts.

Ezergailis said his research indicated that the mass killings of Jews in Latvia had ended by the time Kalējs arrived at Salaspils concentration camp in late 1942. He said international pressure had forced Latvia to seek prosecution of Kalējs as the price of gaining membership into organizations such as NATO and the European Union.

Meanwhile, attorneys for the 87-year-old suspect voiced concerns that such international pressure on Latvia means that Kalējs can't count on an impartial ruling in his homeland.

Latvian officials insisted Kalējs would get a fair trial if Australia decided to extradite him. "Our courts are capable of holding an honest and fair trial. Kalējs will have every chance to defend himself and he'll get a fair hearing," The Associated Press quoted Justice Ministry spokesman Leonards Pāvils as saying.

Latvia indicted Kalējs for taking part in the Holocaust in Latvia during the 1941-1944 German occupation, when some 80,000 Jews were killed.

Kalējs, who took Australian citizenship in 1957, fled to Melbourne last year to avoid deportation from Britain. He was deported from Canada in 1997 and the United Sates in 1994 for lying on entry forms about his past.

Kalējs was arrested last December after Latvia requested his extradition. He is now free on bail at a home for the elderly.

The extradition hearing before Magistrate Lisa Hannan is expected to end this week.

Former OMON fighter detained

Security police detained Mikhail Sidorov, a former Riga Soviet OMON fighter, who had been sought for crimes committed in 1991 during the Soviet attempt to regain control over the Baltic states.

The Prosecutor General's office said Sidorov, 32, had refused to provide any information on the OMON's actions ten years ago.

None of the ten former OMON militiamen, who were tried in Latvia and found guilty of attacks on the Interior Ministry and the Press Building that took human lives, has been sentenced to imprisonment. Seven were put on probation, while three received suspended sentences.

Tibet support group in Parliament

Members of the Latvian Parliament established a Tibet support group last week. The group will host the Dalai Lama, Tibet's leader in exile, during his visit to Latvia in June.

The Chinese Embassy in Riga protested saying, "China is against other countries giving the Dalai Lama a chance to practice separatism, irrelevant of what kind of visit he is making."

No dividend on Nafta profit

The Latvian Privatization Agency (LPA) asked Ventspils Nafta to approve a dividend on 2000 profit, but the company's shareholders voted against the option.

LPA, which represents the state's 43.6 percent stake in the oil terminal, wanted its shareholders to approve a LVL 0.02 (USD 0.0317) dividend on 2000 profit for a total distribution of LVL 2 million (USD 3.17 million).

The shareholders approved a 2001 net profit target of LVL 8.6 million (USD 13.67 million). The firm made LVL 13.3 million (USD 21.1 million) net profit in 2000 and last paid a dividend, in 1998, of LVL 0.03 (USD 0.047).

Ventspils Nafta also said that its crude oil handling could fall by half in 2002 due to competition from a new Russian port in Primorsk. The terminal handled around ten percent of Russia's total 2000 crude exports of 142.4 million tons (2.85 bpd).

And in other news...

Prosecutors indicted 12 soldiers of the Special Task Unit for beating other conscripts and staging brutal initiation rites. Three more soldiers will be indicted this week. About 28 soldiers have suffered from cruel treatment in the Special Task Force.
The Latvian Social Democratic Workers Party and right-of-center For Fatherland and Freedom /LNNK finished the draft of the Riga City Council coalition agreement, which will now be discussed in the party Saeima factions and boards.
Latvia won the right to hold the World Ice Hockey championship in 2006.
The Baltic states and the United States Trade and Development Agency agreed to modernize the Baltic air surveillance companies. To help Latvia and its neighbors to meet the satellite technology standards of the International Civil Aviation Organization, the United States will contribute USD 650,000 (LVL 409,500). It will also send air navigation experts to the joint task force.
Latvian Gas's council asked the board to prepare a report on the possibility of achieving, in court, an end to the state regulation of natural gas prices to industrial users. Prime Minister Andris Bērziņš said the state would not stop regulating natural gas prices as long as Latvian Gas is a monopoly.
Latvia's current account deficit almost doubled month-on-month to LVL 23.4 million (USD 37.48 million) in March, the result of a 32 percent expansion of the trade deficit, the central bank said.
Germany was Latvia's most important foreign trade partner in the first quarter, the Central Statistics Office reported. Exports to Germany constituted 18.8 percent, LVL 57.392 million (USD 91.09 million), of the country's total export worth LVL 304.57 million (USD 479.637 million).

Ieva Raubiško, 18 May 2001

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