Latvia's anti-corruption force arrest high-profile boss of railways

By bne IntelliNews August 7, 2015

Mike Collier in Riga -

 

In a move no one saw coming – least of all its target – Latvia's anti-corruption force, the Corruption Prevention and Combating Bureau (KNAB) swooped on the morning of August 7 to arrest Ugis Magonis, chairman of state-owned Latvian Railways (Latvijas Dzelzcels, LDz) and one of the most prominent businessmen in the country.

Transport Minister Anrijs Matiss, whose ministry overseas LDz, said he had no information about the charges to be brought against Magonis, but that the LDz boss' office had already been raided and his ministry was fully cooperating with KNAB.

Within an hour, an emergency meeting of the LDz management board was called and within two, Magonis had been summarily dismissed, replaced as acting chairman by board member Aivars Straksas, according to a statement from the ministry – suggesting that whatever charges Magonis will face must be pretty serious and pretty convincing.

KNAB was remaining tight-lipped about the affair, telling bne IntelliNews: “We are releasing no additional information at this time. When we are ready to release information to the public we will inform you.”

Magonis has worked at Latvian Railways since 2003, and as president since 2005.

LDz is involved in freight transportation by rail and the maintenance of infrastructure. It is a key strategic player in the economy, responsible for huge transit volumes to and from Russia as well as employing around 12,000 people.

In March, Magonis caused embarassment for Minister of the Economy Dana Reizniece-Ozola by holding a lavish birthday party at Unesco-listed Rundale Palace to which he invited – as well as her – Russian Railways boss Vladimir Yakunin, a close associate of President Vladimir Putin. Yakunin is blacklisted by the US and bne IntelliNews understands he was set to be blacklisted by the EU as well until intense lobbying from Latvia – to which Magonis is believed to have contributed  had him removed from the list.

The party included huge projections of Magonis' smiling face on the baroque walls of the palace while guests quaffed champagne and watched fireworks, in a display of hubris that left many open-mouthed and wondering how he had afforded such lavish entertainment.

Magonis' complex tax and family-linked business arrangements, reputedly including offshore companies, may have been what attracted the attention of KNAB, while procurement contracts are another potential source of interest. But at the moment, all such speculation remains theoretical.

The Latvian business magazine Kapitals is likely to be particularly upset about Magonis' detention – he's their August cover star, beaming from newstands across the country and declaring how he's raring to get down to business.

In 2013, Magonis was awarded a state decoration, the 'Cross of Recognition' by President Andris Berzins. Its motto? “Pour les honnêtes gens” (For honest people).

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