Latvian police launch probe into train upgrade tender involving Ossinovski

Oleg Ossinovski. (Postimees/Scanpix)
8/8/2016 1:27 PM
Source: BNS
Category: Business

The Latvian Economic Police has launched a probe into the 22 million euro project for the modernization of diesel trains for national Latvian railway company Pasažieru Vilciens, whose completion has been delayed by more than six months and in which Estonian millionaire Oleg Ossinovski is involved, Latvian daily Diena reported on Monday.

Economic Police Chief Pēteris Bauska sent a letter to the Ministry of Transport requesting that they assess the responsibility of involved officials and estimate possible losses due to the delay, the Latvian paper reported.

The 21.9 million euro contract was won two years ago by DMU Vilcieni, a consortium of three companies of which one was Daugavpils Lokomotīvju Remonta Rūpnīca (DLRR), which is controlled by Ossinovski. The other two companies were Rīgas Vagonbūves Rūpnīca (RVR), whose council chairman is Russian citizen Eduard Boze and which is indirectly controlled by Aleksandrs Brandavs, a board member of the Riga City Council's ruling party Honor to Serve Riga, and joint stock company VRC Zasulauks, which is owned jointly by RVR (49 percent) and Pasažieru Vilciens (50.9 percent).

The project deadline has been extended several times. Moreover, deficiencies were discovered in the first sets of trains delivered to Pasažieru Vilciens.

Pasažieru Vilciens confirmed that an inquiry has been launched. The company has received questions from the Economic Police and is in the process of preparing answers. At the same time, however, the company claimed that the project was making progress — four sets of trains have been put into operation, a fifth is in the process of being accepted and a sixth set is currently being tested.

The Latvian government has granted another extension to the project, this time until Sept. 30.

The procurement tender for upgrading 19 diesel trains was signed on Jan. 31, 2014. The original deadline for the project's completion was late September 2015, which was subsequently extended until June 30, 2016.

The Latvan Ministry of Transport stated that yet another deadline extension was necessary due to several factors, notably the fact that certain defects had been discovered after putting the first set of upgraded trains into operation and parts from the trains in the fifth and sixth sets had been used to correct said defects, but suppliers from Russia had been slow to deliver necessary spare parts and some parts still had yet to be received.

It is planned to claim a late delivery fine of up to 2.2 million euros or 10 percent of the contract value from DMU Vilcieni.

Editor: Aili Sarapik

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