Financial Services, Latvia, Legislation, Transport

The city’s budget has not yet been adopted, therefore municipal companies receive one 12th of last year’s basic budget monthly, and in the case of Rigas Satiksme it is EUR 8.35 mln, which is about EUR 100 mln a year. “We cannot live with this budget,” said Matiss, adding that at least EUR 137 mln a year would be needed for the company to survive, including EUR 16.7 million already in March.

Ernst & Young has conducted an audit in Rigas Satiksme. Matiss said that the auditors’ report show that about EUR 6 mln have been overpaid in a fuel procurement with a company whose owners are hidden in offshores. The loan granted for purchase of trams has been spent on wages. 40 percent of money collected from fares have been spent on wages. Matiss is not yet ready to publish the auditors’ findings yet, but plans to initiate a number of court proceedings based on these facts.

Rigas Karte company, maintaining the e-ticket system, parking meters and terminals at school canteens where pupils use their e-tickets to receive free lunches, has been the most expensive spender. Rigas Satiksme last year paid EUR 27.7 mln to Rigas Karte, and the sum is growing. Rigas Karte ir linked with Honor to Serve Riga member Aleksandrs Brandavs.

Brandavs is the true beneficiary in another company pumping money out of Rigas Satiksme – Rigas Mikroautobusu Satiksme (RMS), providing minibus passenger service in Riga. According to the new agreement that came into force on December 1, 2018, Rigas Satiksme pays RMS EUR 1.34 for every carried passenger, while RMS repays money collected from fares to Rigas Satiksme, and the price of the ride is EUR 1.15.

Auditors also discovered that a part of the EUR 50 mln loan granted to Rigas Satiksme by SEB Banka for purchase of 20 low-deck trams has been used on wages. The temporary board at the end of last year demanded additional EUR 17 mln in subsidies from the Riga City Council to replace this money.

About EUR 3 mln have been overpaid for fuel in 2016 and 2017 to RDZ Energy company whose owners are in Malta and the Virgin Islands.

“This is not a joke,” Matiss said about the situation in the company, adding that there will be court proceedings initiatied and the company will go through some changes.