The scandal surrounding support for forestry companies in Latvia has reached a new level. After the State Audit Office's review, the suspended state secretary of the Ministry of Agriculture stated that he signed the controversial decision under pressure from former minister Armand Krauze. The former minister denies this.
A serious political and legal crisis is unfolding around decisions to support the forestry sector in Latvia. Following the publication of the State Audit Office's findings, the state secretary of the Ministry of Agriculture, Girts Krūmiņš, was suspended, and former minister Armand Krauze found himself at the center of a new conflict.
Auditors concluded that state-organized assistance to certain forestry companies caused damage to Latvijas valsts meži of nearly 50 million euros. According to the audit, there was no crisis in the sector, which had previously been used to justify the reduction in timber prices. Moreover, the companies themselves were purchasing timber at auctions during that period at an average of 23% above the starting price.
State auditor Edgars Korčagins stated directly that this was not about supporting the industry as a whole.
“This was definitely not support for the industry, but support for specific enterprises,” he emphasized.
The State Audit Office also indicated that the government should not have intervened in the commercial activities of Latvijas valsts meži at all. According to the auditors, the Cabinet of Ministers and the Ministry of Agriculture overstepped their authority by intervening in decisions that should have been made by the company's governing bodies.
These findings have now become the basis for a criminal investigation by the prosecutor's office. The responsibility of ten individuals is currently being assessed, including former minister Armand Krauze and suspended state secretary Girts Krūmiņš. They are being charged with abuse of office.
The most notable moment was the public position of Krūmiņš himself. In an interview with the show Nekā personīga (TV3), he admitted that he signed the decision to reduce prices and apply preferential terms to exclusive contracts for companies in the Pata group, even though he understood the consequences.
According to Krūmiņš, the decisive episode occurred in March of last year. At that time, he claims, minister Armand Krauze called him directly during a shareholders' meeting of Latvijas valsts meži and insisted on including the issue of special contracts in the agenda.
Later calculations by Latvijas valsts meži showed that the application of the new mechanism would lead to a loss of 12 million euros over two years. Despite this, the decision was still made.
“That was the moment when I broke down or submitted. I acknowledge that I signed this protocol. And I regret that I succumbed to this pressure,” Krūmiņš stated.
He also claims that he directly informed the minister about the potential losses, but received a response that action was still necessary.
Armand Krauze denies the accusations. According to him, there was no pressure, and officials were merely executing government decisions.
“I did not exert pressure,” said the former minister.
The scandal has already led to serious personnel consequences. Krauze himself previously left the ministerial post, and former state secretary Raivis Kronbergs announced his departure from public service. An internal investigation has been initiated regarding the current state secretary.
At the same time, the prosecutor's office is considering two options for further action: either seeking the annulment of government decisions to support the forestry industry or pursuing damages in the interests of the state through the courts.
The scandal surrounding Latvijas valsts meži is gradually transforming from an industry conflict into one of the largest political and economic stories of recent years — raising questions about the limits of government authority, the influence of business, and the accountability of officials for decisions amounting to tens of millions of euros.
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