CORRECTION: Flat-out lie of the JSC “Ventspils nafta” officials


After getting acquainted with the joint stock company's “Ventspils nafta”
announcement published on 12 October 2010 by JSC “NASDAQ/OMX Riga”, JSC
“Latvijas kuģniecība” (Latvian Shipping Company (LSC)) repeatedly states that
it will continue its operation in order to ensure execution of all, more than
5000 company's shareholders' interests, and not the unfair plans of one group
of shareholders led by self-interested interests. LSC is also forced to yet
again inform all investors that JSC “Ventspils nafta” in its public
announcements distributes flat-out lie. 

JSC “Latvijas kuģniecība” cannot and may not ignore the fact that LSC attorneys
in the United Kingdom have revealed new facts in relation to the LSC initiated
court proceedings about defrauding of more than USD 100 million from the
company during 2003-2005. The information available to the LSC attorneys allows
to conclude that possibly also companies of “Vitol Group”, which at the moment
controls one of the LSC shareholders - JSC “Ventspils nafta”, were involved in
the large-fraud schemes that via fraudulent agent companies were established by
former LSC officials, including current member of JSC “Ventspils nafta”
Supervisory Council Oļegs Stepanovs. Thus according to the LSC attorneys'
opinion “Vitol Group”, who on behalf of JSC “Ventspils nafta” tries to position
itself as a model Western business company, has probably gained illegal profit
in amount of several millions of dollars at the expense of LSC. 

In turn, criminal proceedings have been brought in Latvia regarding these
unlawful transactions, where several former senior LSC employees have been
classified as suspects. As the management of LSC was informed recently by
representatives of JSC “Ventspils nafta” two senior managers of “Vitol Group”
Paul Mulholland and Jeffrey Martz have received summons from Latvian law
enforcement bodies to provide explanations. 

The publicly available information in international press on business
activities of “Vitol Group” approves that this owner of JSC “Ventspils nafta”
shareholders has never been fastidious about its activities, thus, for example,
in November 2007 in the Court of the State of New York “Vitol Group” recognised
itself guilty for bribery of Iraq officials and agreed to pay USD 13 million to
the Development Fund for Iraq, but USD 4.5 million in this regard were
transferred to the account of New York City and State of New York. 
 
Unfortunately, we have to state that officials of JSC “Ventspils nafta”
continue issue of public lie regarding the Management Board of LSC. Against the
JSC “Ventspils nafta” current statements of non-existence of such plans it is
the draft amendments to the Articles of Association that were initiated by JSC
“Ventspils nafta” and submitted to LSC that prescribe implementation of the
mechanism for reduction of number of Supervisory Council members and
discriminates the state's rights. This fact serves as another argument to be
highly cautious and sceptical regarding any announcement of the JSC “Ventspils
nafta”. We yet again would like to remind that one of the LSC shareholders -
the state of Latvia - categorically requires that even the possibility to
review such illegitimate issue that breaches the LSC Privatisation Regulations
is not permitted, whereby LSC was forced to act by postponement of the
extraordinary shareholders meeting of 8 October 2010, the agenda of which
included the illegal amendments to the LSC Articles of Association initiated by
JSC “Ventspils nafta”. 

LSC would also like to remind that against the abstruse hysterics stirred up by
the JSC “Ventspils nafta” the majority of LSC Supervisory Council members are
representatives of JSC “Ventspils nafta”, but member of the LSC Management
Board is a representative of the JSC “Ventspils nafta” shareholder “Vitol
Group” Paul Thomas. 



Additional information:
Ģirts Apsītis
Adviser of the Chairman of the Management Board
Latvian Shipping Company
Phone: +371 67020126
E-mail : ir@lscgroup.lv