The change of the Supervisory Board of Latvijas valsts meži may be a harbinger of more radical changes in the management of state-owned forests - privatization. We are talking about 1.62 million hectares of land in the Republic of Latvia that are currently prohibited by law from being privatized. But this is only a matter of political will - laws can be changed, and there are various signs that someone wants to do so.
At the annual forestry conference on Thursday, much was said about the challenges facing forestry in the context of European climate policy, the biodiversity strategy, which calls for a radical increase in bans on economic activities in forests, and the promotion of the bioeconomy. But all this was talked about as if it applied only to private forest owners. Nothing about Latvia's state-owned forests, which account for half of the total forest area. And the Ministry of Agriculture is also silent about the recent major changes in the management of Latvijas valsts meži and the exprected change of Management Board.
It has not been explained to the public why it was necessary to replace the company's current Supervisory Board, why the Board now has five members instead of two. And it is not explained why Rinalds Muciņš, a health sector super-official, has been appointed to the Board. One would think that the head of the Pauls Stradiņš Clinical University Hospital has had no connection with the forestry sector so far - how could he possibly know how to supervise the largest forestry company in Latvia? And he works full time in the hospital. However, on closer inspection, there is a certain connection here. The most important function of Stradiņš Hospital, apart from treating patients, is the acquisition of finance for large construction projects. There is a lot of money there. But there is much, much more money in Latvijas valsts meži. And this explains what two more political super-officials are doing on the new Board - Edmunds Beļskis, the former Chairman of the Board of Latvian State Radio and Television, and Kaspars Ozoliņš, former State Secretary at the Ministry of Transport.
For a couple of months now, the forest backrooms have been talking about the tectonic shifts in the sector that are coming soon. Latvijas valsts meži is a huge company and manages huge assets, directly or indirectly affecting everyone in Latvia. Wood growing, recreation, road building, minerals, job creation - the role of Latvijas valsts meži in the national economy is incalculable, and that's why there is such anxiety in the forestry and related sectors. The Supervisory Board has been replaced, and there is no doubt that the Management Board will also be changed, and with it the company's overall policy. The only question is when. The mandate of the current Management Board and of the company's long-standing CEO, Roberts Strīpnieks, expires on May 6. The new Supervisory Board will then have to decide whether to extend the term of office of the existing members or to organize a new competition for all or part of the Supervisory Board. Of course, in agreement with the company's highest decision-making body, the shareholders' meeting, which represents the Ministry of Agriculture as the shareholder. Formally, that is the Director of the Ministry's Forest Department, Arvīds Ozols. The people in the know explain that the expiry of the Board's mandate does not exclude the possibility for the Supervisory Board to change the Management Board earlier, but this would be more difficult and would cause unwanted repercussions.
The current Chairman of the Supervisory Board is Jurģis Jansons, Director and Senior Researcher at the Forest Research Institute Silava. The right man in the right place. He knows everything about forests. He was asked by Neatkarīgā to comment on the changes in the management of the company, and his comments are quite harsh:
"Unfortunately, I have not followed the developments in the forest sector since November 2 this year. Before that, for more than five years, when I worked on the LVM Supervisory Board, our work was always assessed as very good by the state authorities. Logically, such an assessment results from the very good work of the company's management - the Management Board. A very well-performing Supervisory Board was completely replaced by means of an "open competition". If this had been done with a very good Management Board, we would have had the last proof that Latvia is a failed state." It is significant that the words "open competition" are put in quotation marks. Apparently, the competition has put the pre-determined people on the Supervisory Board and will soon have the pre-determined people on the Management Board too. Maybe we shouldn't worry so much about political insertions.
The forest will grow anyway, with or without them. The only question is who will own the forest in future.
You do not have to be a hospital manager or a traffic project manager to realize that large state-owned enterprises are very valuable. This year's business top list estimates the value of Latvijas valsts meži at 1.46 billion euros, behind only Latvenergo. And that is why every now and then someone talks about privatization. Only now it is being called by a more subtle name.
Neatkarīgā's source in the forest industry confirms: "The desire to list LVM on the stock exchange is already publicly announced from time to time, probably someone is already interested in making money from these transactions." Several years ago, the possibilities of selling state-owned companies were studied by the Cross-sectoral Coordination Centre on behalf of the government. The order was fulfilled, with the optimistic conclusion that "listing the shares of the largest state-owned companies on the stock exchange is an opportunity for the development of the Latvian capital market".
Pēteris Vilks, the head of the Cross-sectoral Coordination Centre, explained what the listing of large companies' shares on the stock exchange means in an interview with the government's official newspaper, Latvijas Vēstnesis:
"It is legally a change of ownership of a part of shares of 5, 10, 15% or some other amount. To some extent, these companies become private, and the state will no longer be able to single-handedly determine remuneration, select the members of the Management Board and the Supervisory Board. Shareholder agreements will have to be reached. But, of course, there is no question of losing state control in these companies."
The years of struggle for influence in Lattelekom, now TeT, 49% owned by the Swedish Telia Company AB, give a good idea of how difficult it is to maintain state control in such a semi-private company. It took a lot of effort to prevent the Swedes from taking over the company completely and taking Latvijas mobilais telefons with them, which would already be a strategically dangerous loss for the state.
But there is another catch that makes Latvijas valsts meži more difficult to access for privatizers and listers. Unlike the two telecompanies, Latvijas valsts meži and five other large state-owned companies are prohibited from privatization by the Law on Privatization of State and Local Government Property and Completion of the Use of Privatization Certificates. This is enshrined in Article 17:
"Actions with objects of national economic importance
(1) The State Joint Stock Company Latvenergo, the State Joint Stock Company Latvijas pasts, the State Joint Stock Company Starptautiskā lidosta Rīga, the State Joint Stock Company Latvijas dzelzceļš, the State Joint Stock Company Latvijas gaisa satiksme and the State Joint Stock Company Latvijas valsts meži and the shares of these companies may not be privatized or alienated." So, at the moment, no shares of Latvijas valsts meži may be sold. To do so, the law has to be changed, and this requires the consent of the Saeima. The change in the management of Latvijas valsts meži is an indication that the ruling coalition is once again suffering from the privatization itch. The public must be watchful, otherwise the Latvian State may lose its green treasure - the Latvian state forests.
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