RB Rail employees demand board chair resignation, say project in crisis

Karolis Sankovski, RB Rail's supervisory board chair, is facing calls from employees to step down.
Karolis Sankovski, RB Rail's supervisory board chair, is facing calls from employees to step down. Source: RB Rail AS

Employees of the Rail Baltic parent company, RB Rail, have demanded the resignation of the company's supervisory board chair, claiming that the project has reached a critical stage due to poor corporate governance, misuse of EU funds, and conflict of interest situations. A statement issued by the employees also points towards virtual nationalization of the project as being a solution to its woes.

RB Rail is the parent company of Rail Baltic Estonia, and the rest of the Rail Baltic, sometimes referred to as Rail Baltica, projects across all three Baltic States.

A joint statement signed by 62 employees from the company pointed the finger at supervisory board chair Karolis Sankovski as being unable to follow good corporate governance principles, or to prevent the high and disruptive turnover of the high-level leadership, as well as conflict of interest.

RB Rail's last CEO, Finn Timo Riihimäki , announced his resignation in late Ocotber after a little over eight months in the job. Additionally, Riia Sillave, CEO of Rail Baltic Estonia, is about to leave the Estonian subsidiary of RB Rail.

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

RB Rail employees had already sent a joint statement at the end of October following Riihimäki's resignation, as well as the departure of RB Rail's Chief Technical Officer (CTO), to the prime ministers and transport ministers of all three Baltic States, BNS reports.

The changes were the fifth high-level management change in a little over a year and pointed towards structural issues in the project's implementation, the employees claimed.

Agnis Driskna was appointed interim RB Rail CEO on Tuesday, starting from Dec. 2, according to BNS. Mart Nielsen was the CTO who resigned, and is stepping down from the post just before Christmas to be replaced on a temporary basis by Kaido Zimmermann, head of RB Rail's planning and design department.

Baltic states governments should take control

The latest statement highlights a meeting of all three Baltic States' prime ministers which it says takes place next week.

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

"We believe that for the project to succeed, it is ultimately important to join forces between all the Baltic States ahead of construction beginning. It is time to ask of the national parliaments, governments and the European Commission whether Rail Baltica is a project which will bring long-term benefit to the Baltic States and the whole of the EU, or whether it will continue to struggle with inefficiencies, conflict sof interest and careless attitudes towards EU and national public funds," the statement continues.

RB Rail employees also remain committed to playing active role in the reshaping and improving the project's governance and implementation, according to BNS, and suggest the project be brought under prime ministerial supervision across the three countries to attempt to stave off problems with fragmented responsibilities, poor coordination of public and private sector, and a failure to promote cross-sectoral synergies.

A single, accountable implementing body would facilitate reaching the venture's initial vision, the employees believe, as would an independent supervisory board, which could best represent all interests, including those of employees, and smooth out interference in operational decision making.

Ultimately, the immediate resignation of Karolis Sankovski would be needed: "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," the statement says.

RB Rail employees have also invited the existing supervisory board members to explain how the new interim CEO (Driskna-ed.) meets the criteria outlined in RB Rail shareholders agreement where the candidate has to be an internationally experienced business manager and a knowledgeable expert on large infrastructure construction, financing and management matters.

The employees also ask how the new interim CEO plans to avoid a conflict of interest situation given that he is still employed by an organization that was previously supervised by RB Rail.

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 OÜ.

Rail Baltic is a double track, European standard 1,435-mm gauge electrified railway for passenger and freight transport to run from Tallinn to the Lithuanian-Polish border, with an overall length of 870 km.

Editor: Andrew Whyte

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