Construction, EU – Baltic States, Railways, Transport

International Internet Magazine. Baltic States news & analytics Saturday, 30.05.2020, 12:34

Rail Baltica project in critical situation due to poor corporate governance and conflict of interest situations - RB Rail employees

BC, Riga, 27.11.2019.Print version
Rail Baltica railroad infrastructure project has reached a critical situation due to poor corporate governance and conflict of interest situations, 62 employees of the joint-stock company RB Rail say in a joint statement, citing LETA.

"Notwithstanding the considerable progress made in the project, we are very concerned that the Rail Baltica project, which is generously co-funded by the EU public funding, has reached a critical situation due to poor corporate governance and conflict of interest situations," reads the statement.

On October 30 after resignation of Rail Baltica CEO, RB Rail employees sent a joint statement to the prime minister offices and transport ministries of the three Baltic countries and requested immediate action as the sudden exit of the previous RB Rail CEO and CTO, which brought the fifth top management change in the last fourteen months, showed structural issues in the project implementation setup.

"Hence we issue this letter and also make public the previous joint statement of the employees. We believe that people of three Baltic States deserve to know, and we trust that the Baltic prime ministers shall draw their attention to this situation during their trilateral meeting next week," reads the statement.

RB Rail employees suggest that the supervision of the project is brought to the level of prime ministers, because the current organization’s fragmented responsibilities fail to ensure effective implementation of the project and coordination of public and private sector entities at the national and regional level, as well as fail to promote cross-sectoral synergies.

RB Rail employees believe that immediate transition towards the initial vision for the Rail Baltica joint venture is necessary - an integrated, single implementing body in charge of Rail Baltica project, because today there is no single accountable organization for the project success.

They also want an independent supervisory board of the joint venture to be appointed to ensure that they collectively represent the best interests of all the shareholders of the joint venture, thus avoiding conflict of interest and interference in the operational decision making.

RB Rail employees demand that RB Rail supervisory board chairman Karolis Sankovski immediately resign "due to failure to follow good corporate governance principles and inability to prevent the high and disruptive turnover of the top leadership of the joint venture, as well as the blatant conflict of interest he has demonstrated throughout his tenure."

RB Rail employees want one supervisory board member be appointed to represent the interests of the joint venture employees.

RB Rail employees are inviting the existing supervisory board members to explain how the new interim CEO meets the criteria described in RB Rail shareholders agreement, that is, the CEO has to be an internationally experienced business manager and a knowledgeable expert on large infrastructure construction, financing and management matters, and how new interim CEO plans to avoid the conflict of interest situation, still being employed by the organization that was previously supervised by RB Rail.

"We believe that for the project’s success it is ultimately important to join the forces between all the Baltic States before the construction begins. It is time to ask for the national parliaments, governments and the European Commission whether Rail Baltica is a project which will bring long term benefit for the Baltic States and the whole EU or it will continue to struggle with inefficiencies, conflict of interest and careless attitude towards EU and national public funds," says the statement.

RB Rail employees also remain committed to playing active role in the reshaping and improving the Rail Baltica governance and implementation.

As reported, after the departure of Finnish railway executive Timo Riihimaki as head of RB Rail, Agnis Driksna, director of the Development and Communications Department at European Railway Lines, has been appointed interim CEO of RB Rail. Driksna will assume his duties as of December 2.

Mart Nielsen has also resigned as RB Rail chief technical officer (CTO) and the management board member. Nielsen will be working until December 23. On December 24 the CTO position will be filled in temporarily by Kaido Zimmermann, RB Rail head of Planning and Design Department.

RB Rail is the central coordinator for the Rail Baltic project. RB Rail shareholders include the Lithuanian, Latvian and Estonian railway companies, UAB Rail Baltica Statyba, SIA Eiropas Dzelzcela Linijas and Rail Baltic Estonia OU.

Rail Baltic is a double track, European standard 1,435 mm gauge electrified railway for passenger and freight transport to be built from Tallinn to the Lithuanian-Polish border. The overall length of the railway will be 870 kilometers.






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