Several agreements on eastern border construction to be broken
After becoming acquainted with a report on the situation with the construction of facilities on Latvia^apostrofs;s eastern border, the government today decided to reconsider existing plans and break a number of signed agreements with several companies.
After becoming acquainted with a report on the situation with construction of facilities on Latvia's eastern border, the government today decided to reconsider existing plans and break a number of agreements on design and construction of roads and facilities in the vicinity of the frontier, signed with several companies. A few other companies will be recommended to review the construction cost estimates.
The government's intention is that interpreting today's decision as a "force majeure" would avert fines on breach of contract.
"Force majeure" conditions in contracts usually also include new state or municipal laws and other legislative bills that are beyond the control of the contracting parties.
"In this case, we believe that the Cabinet of Minister's decision is force majeure", Repse said, explaining that the contracts with eastern border construction companies must be terminated, based on the government's decision.
The government decided to reconsider eastern border renovation project after hearing a report from Interior Ministry State Secretary Juris Reksna, which said that LVL 2.889 million had been overpaid for construction of roads at the frontier, and LVL 1.045 million - for construction of Rezekne Border Guard School. This has been ascertained by the State Control and "Buvzinis Ltd.", they also determined a number of other illegalities in the construction of border roads and facilities.
The Prosecutor General's Office has been notified about the findings, it should have to decide launching criminal cases against the respective officials, Reksna said.
The Interior Ministry proposed breaking the eastern border renovation project into three parts, the proposal was backed by the government. Raising border checkpoints will continue, which requires an additional LVL 4.5 million, in order to observe Latvia's commitments to the European Union. A part of these facilities will be constructed next year, others in 2005.
After hearing the Interior Ministry's report, Repse said that the increase in construction costs was "shocking", and that conditions of the contracts should be reviewed until they are "sensible". If companies disagree to amend the contracts so that they are fair and justified, these contracts should be terminated, said Repse.
Lawyers cannot state unequivocally whether such a decision by the government should be viewed as a "force majeure", allowing the state to avoid penalties of up to 5 percent for terminating the contracts, it was said at the government's meeting. It was decided therefore to accelerate the process of terminating the contracts. The Interior Ministry will hire a law office to do this.
The government will be consistent and terminate the disadvantageous contracts, to give a clear signal that such situations will no longer occur, Repse stressed. "And if there are lawsuits, we will go to court," Repse said.
The government's decision stipulates that the Interior Ministry must terminate road design and construction contracts with "Gadiba Ltd.", Latvijas Energoceltnieks Ltd." (LEC), "Slokenbeka Ltd.", joint-stock "8 CBR", "A.C.B. Ltd.", "Ditton Buve Ltd.", "Binders Ltd.", "Arcers Ltd.", joint-stock "U. Pilena birojs".
These contracts will be terminated because land ownership matters have not been settled, State Border Guard officials have said that the roads that are to be constructed according to these contracts are not a priority this year, and based on the State Control's findings.
Contracts on reconstruction of the Border Guard Daugavpils Administration's building, signed with companies "Musu maja" and "Arcers", will also be terminated.
According to an analysis carried out by "Buvzinis Ltd.", which determined that the reconstruction estimate for the Rezekne Border Guard School had been artificially raised by LVL 1 million, the contract with the company "LK Buve" on reconstruction of the school will also be terminated.
The contract with "AMB Buve" will be terminated because reconstruction of the Border Guard's Administration is not a priority.
According to the Interior Ministry's report, the construction of the Border Guard's offices in Lavosnieki, Skilbeni, Krivanda and Opoli will continue within the framework of the program on the integrated development of Latvian border management and infrastructure.
The construction of the Border Guard offices in Pasiene will continue, but the general contractor will be recommended to review the construction estimate.
The construction of the Border Guard's offices in Meiksani will also continue, because it is linked with the contracts with "Siemens" and "Thales" on supplies and installing information, communications and security systems. Nevertheless, the contract's terms will be changed and the general contractor will be recommended to review the cost estimate. After the national budget for 2003 is amended, LVL 304,949 will be allotted for the project.
For the same reason, the Interior Ministry has decided that construction of the Border Guard's offices in Demene will continue, the contract's terms and cost estimate will also need to be reconsidered. LVL 205,231 will be allotted from the national budget for the construction.
Construction of the Indra railroad border checkpoint will also continue, because this project is also linked with supply and installation of information, communications and security systems. This contract's terms and construction estimate will also be reviewed. LVL 908,683 will be allotted for the project from the budget.
Janis Silakalns LETA Jana Saulite LETA
Copyright © LETA
The government's intention is that interpreting today's decision as a "force majeure" would avert fines on breach of contract.
"Force majeure" conditions in contracts usually also include new state or municipal laws and other legislative bills that are beyond the control of the contracting parties.
"In this case, we believe that the Cabinet of Minister's decision is force majeure", Repse said, explaining that the contracts with eastern border construction companies must be terminated, based on the government's decision.
The government decided to reconsider eastern border renovation project after hearing a report from Interior Ministry State Secretary Juris Reksna, which said that LVL 2.889 million had been overpaid for construction of roads at the frontier, and LVL 1.045 million - for construction of Rezekne Border Guard School. This has been ascertained by the State Control and "Buvzinis Ltd.", they also determined a number of other illegalities in the construction of border roads and facilities.
The Prosecutor General's Office has been notified about the findings, it should have to decide launching criminal cases against the respective officials, Reksna said.
The Interior Ministry proposed breaking the eastern border renovation project into three parts, the proposal was backed by the government. Raising border checkpoints will continue, which requires an additional LVL 4.5 million, in order to observe Latvia's commitments to the European Union. A part of these facilities will be constructed next year, others in 2005.
After hearing the Interior Ministry's report, Repse said that the increase in construction costs was "shocking", and that conditions of the contracts should be reviewed until they are "sensible". If companies disagree to amend the contracts so that they are fair and justified, these contracts should be terminated, said Repse.
Lawyers cannot state unequivocally whether such a decision by the government should be viewed as a "force majeure", allowing the state to avoid penalties of up to 5 percent for terminating the contracts, it was said at the government's meeting. It was decided therefore to accelerate the process of terminating the contracts. The Interior Ministry will hire a law office to do this.
The government will be consistent and terminate the disadvantageous contracts, to give a clear signal that such situations will no longer occur, Repse stressed. "And if there are lawsuits, we will go to court," Repse said.
The government's decision stipulates that the Interior Ministry must terminate road design and construction contracts with "Gadiba Ltd.", Latvijas Energoceltnieks Ltd." (LEC), "Slokenbeka Ltd.", joint-stock "8 CBR", "A.C.B. Ltd.", "Ditton Buve Ltd.", "Binders Ltd.", "Arcers Ltd.", joint-stock "U. Pilena birojs".
These contracts will be terminated because land ownership matters have not been settled, State Border Guard officials have said that the roads that are to be constructed according to these contracts are not a priority this year, and based on the State Control's findings.
Contracts on reconstruction of the Border Guard Daugavpils Administration's building, signed with companies "Musu maja" and "Arcers", will also be terminated.
According to an analysis carried out by "Buvzinis Ltd.", which determined that the reconstruction estimate for the Rezekne Border Guard School had been artificially raised by LVL 1 million, the contract with the company "LK Buve" on reconstruction of the school will also be terminated.
The contract with "AMB Buve" will be terminated because reconstruction of the Border Guard's Administration is not a priority.
According to the Interior Ministry's report, the construction of the Border Guard's offices in Lavosnieki, Skilbeni, Krivanda and Opoli will continue within the framework of the program on the integrated development of Latvian border management and infrastructure.
The construction of the Border Guard offices in Pasiene will continue, but the general contractor will be recommended to review the construction estimate.
The construction of the Border Guard's offices in Meiksani will also continue, because it is linked with the contracts with "Siemens" and "Thales" on supplies and installing information, communications and security systems. Nevertheless, the contract's terms will be changed and the general contractor will be recommended to review the cost estimate. After the national budget for 2003 is amended, LVL 304,949 will be allotted for the project.
For the same reason, the Interior Ministry has decided that construction of the Border Guard's offices in Demene will continue, the contract's terms and cost estimate will also need to be reconsidered. LVL 205,231 will be allotted from the national budget for the construction.
Construction of the Indra railroad border checkpoint will also continue, because this project is also linked with supply and installation of information, communications and security systems. This contract's terms and construction estimate will also be reviewed. LVL 908,683 will be allotted for the project from the budget.
Janis Silakalns LETA Jana Saulite LETA
Copyright © LETA
