Latvian rail chief charged as corruption case expands to Estonia

By bne IntelliNews August 11, 2015

The Latvian Corruption Prevention and Combating Bureau (KNAB) has started criminal proceedings against the former head of state rail company LDz on the grounds of bribery. The case reportedly also involves one of Estonia's richest businessmen.

KNAB announced on August 10 that the former head of LDz, Ugis Magonis, is suspected of “accepting the offer to take bribe on a large scale.” The payoff was allegedly made in connection to a tender held by LDz subsidiary LDz Ritosa Sastava Serviss (LDz Rolling Stock Service) to buy four diesel locomotives. The tender was won by Skinest, an Estonian company owned by Oleg Ossinovski.

According to Estonian media, Magonis accepted a bribe of €500,000 from Ossinovski in return for agreeing to the deal. Ossinovski’s offices were searched by Estonian authorities on request of their Latvian counterparts, the newspaper Aripaev reports.

“I am aware that the Latvian prosecution has launched an investigation, but I would like to stress that the procurement was completed by following all the rules,” Ossinovski said, according to ERR.

Magonis has remained in custody since August 8, after the police and KNAB representatives arrested him. Details of his capture have since emerged, suggesting it was a more exciting than is usually seen in corruption cases. 

Magonis was reportedly crossing the Latvian border on his return from Estonia. The rail official was found to have the full bribe in a suitcase in his car, and was only apprehended after a car chase.

Magonis has been in KNAB’s focus before. In 2010, KNAB launched an inquiry into several large transactions Magonis had declared in his 2009 statement to the State Revenue Service. It was alleged then that the suspicious transactions might have been used to cover up money laundering operations, Latvian public media website LSM.lv reported.

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