Latvian Shipping Company Submits New Evidence in a Criminal Case on Losses Caused to the Company by its Former Management and Misappropriation of Financial Resources

The public joint stock company Latvian Shipping Company (LASCO) has completed
internal investigation, submitting a bulky set of evidence to the Economic
Police Department, including documents of “black-cash”, which indicates to the
possible relation of certain shareholders and former officials to the possible
criminal offences by misappropriating Lasco financial means. 

Today, on 2nd August, LASCO Board got acquainted with the report of internal
investigation and authorised Imants Vikmanis, the Chairman of the Board, to
submit to the Economic Police Department the set of new evidence, which affirms
suspicions of possible criminal offences, which might have been performed by
the separate former members of the LASCO Board and by one member of the Council
in the period between 2003 and 2005, causing losses to the company in the
amount of at least 36 million US dollars. 

Criminal case on unprofitable ship chartering agreements was already initiated
in July 2005, and it was based on a report of international shipping industry
auditors Moore Stephens identifying a number of ship chartering agreements
which have been conluded at reduced prices with companies, related to the
former LASCO officials, thus causing substantial loss to LASCO, which was
estimated by the auditors to reach at least 36 million US dollars in 2003 and
2004 alone. During the course of internal investigation initiated by the
management of the company, which required two years  to perform a profound
study of facts, evidence was found to cause serious suspicion that the former
management of LASCO have chartered the ships on a time charter basis at
substantially reduced prices to different off-shore companies (such as e.g.,
Recoletos Ltd., Luzero Limited, Romanica Overseas Limited, etc.). These
off-shore companies have subsequently chartered out the ships at a market
price, gaining profit of many millions, bypassing LASCO and thus causing losses
to the company which can be measured in millions. The new evidence proves the
previously raised suspicion of direct involvement of the few former LASCO
officials and shareholders with the scheme of ship chartering agreeements. 

The new set of evidence, which is forwarded to the Economic Police Departament
consists of 69 packages of documents and contains information regarding
off-shore companies which have concluded unprofitable chartering agreements, 
authorisations issued by these companies, list of bank accounts in a Latvian
commercial bank, information on owners of these off-shore companies and their
relation to LASCO shareholders, unprofitable chartering agreements, business
correspondence of separate officials involved in the scheme, information stored
on computers of the former officials, which indicates a possible relation to
unprofitable chartering agreements and contracting off-shore companies, the so
called “black cash” register of received and expected off-shore companies'
income from these agrements, as well as number of other documents, e.g.,
off-shore company maintenance invoices and reports on the financial standing of
off-shore companies, which were sent to the officals residing in Latvia. 

Special attention in the LASCO's application to the Economic Police Departament
is paid to the fact that some parties to unprofitable chartering agreements are
directly related to two LASCO sharehoders. Namely, the shares of Eastgate
Properties Limited (Eastgate) and Ojay Limited (Ojay), owning 5.446% and 8.829%
of LASCO shares respectively, are owned by other off-shore companies: Regina
Developments Limited and already mentioned Recoletos Limited, each of which
owns 50% of Eastgate and Ojay. 

Latvian resident Ņina Gļebova is stated as a director of Recoletos Limited,
acting also as an authorised representative of LASCO shareholders Ojay and
Eastgate. As for Regina Developments Limited, attorneys-at-law Mārtiņš Kvēps
and Rudolf Meroni claim to be their representatives. These three persons
together try to create alleged authorisations in order to represent the said
shareholders in the LASCO's general meetings. Judicial proceedings on illegal
authorisation are going on at present. It may be concluded that one and the
same official Ņ.Gļebova is possibly involved both in the scheme of unprofitable
chartering agreements and in acting in the capacity of representative of LASCO
shareholders. Therefore considering these and other facts, it may be assumed
that part of LASCO shareholders had been involved into the activities, which
might have  intentionally reduced the profit of the company, by diverting it to
the accounts of off-shore companies. 

The set of newly gained evidence also includes business correspondence, e.g.,
print-outs of electronic mail, whereby Ņ.Gļebova informs Valērijs Godunovs, the
former member of the Board of LASCO and Oļegs Stepanovs, the former member of
the Council, on the cash-flow, savings, expected income, etc., of the off-shore
companies (e.g., Recoletos, Luzero, Romanica) which have concluded the
unprofitable chartering agreements. 

The materials to be submitted to the Economic Police Department include
information on other off-shores, which are possibly related to the chartering
agreements, and which are managed by a small group of people residing in
Latvia. This information is indicative of some peculiar regularities. For
instance, the off-shore company Skeena Overseas, which was a party to
unprofitable LASCO chartering agreements, is a founder of company, which after
several name changes, is now known as SIA SSF Apsardze. Juris Rekšņa, the
former Head of State Police is the member of the Board of this company. 

In the application to the Economic Police Departament the Chairman of the Board
of LASCO requests, within the framework of the initiated criminal case, to
perform a detailed investigation of facts mentioned in the application, and to
ascertain the true beneficiaries of off-shores and their bank accounts in
Latvia, to inform the company of the course of the criminal case, and to
recover the losses caused to LASCO from the quilty persons. 


For detailed information:
Marita Ozolina-Tumanovska
Head of Public Relations Department
Phone:  (+ 371) 67020120, 29287169
E-mail: marita.ozolina@lscgroup.lv