When establishing the Latvian-Russian borderland, at least 7.14 million euros of state budget funds and property were used illegally. Following the audit, the State Audit Office came to this conclusion by detecting violations of laws and regulations, including unlawful major deviations from the approved construction project.
The State Audit Office has identified various irregularities and delays in the construction of the eastern state border already from 2016 and has urged the Ministry of the Interior to eliminate them. However, during this audit assessing the legality of the use of state budget funds allocated to the infrastructure and maintenance of the borderland, one concludes that (contrary to the recommendations) construction has not been completed in the planned timeframe, that is, by 31 December 2019 although the financing has been spent in full.
The State Audit Office admits after the audit that the Ministry of the Interior has not sufficiently supervised the construction of the state borderland at the Latvian-Russian border and the State Border Guard and the Provision State Agency (hereinafter – Agency) handled state funds illegally. In addition, one has changed the structural solutions of the approved construction design and the amount of construction work that will require much more expenditure from the state budget in the future than initially estimated. The real situation suggests that one will need to seek for additional funding to complete the work on the Latvian-Russian border as 4.69 million euros is needed, of which the Ministry of the Interior will have only 1.16 million euros available in 2020. There were 42.69 million euros allocated for the construction of the eastern state border of Latvia from the state budget for the period between 2015 and 2022, of which 26.8 million euros were allocated for the establishment of the Latvian-Russian borderland.
“The borderland project has so far been implemented without regard to approved plans, laws and regulations, or cost-efficient or economic justification. Therefore, the State Audit Office will address law enforcement bodies by requesting to evaluate the bringing of responsible officials to trial. Given the fact that construction work of state borderland on the Latvian-Belarussian border should begin in 2020, the Ministry of the Interior must take immediate action to prevent anything similar at this section of the state border,” stressed Auditor General Elita Krūmiņa.
The State Border Guard performs an atypical function
Construction of such an impressive scale is not a function of the State Border Guard; therefore, the State Audit Office considers that the Ministry of the Interior should have involved the Agency in supervision and coordination of construction, which is the centre of competence of the home affairs sector in construction. Planning and implementation of the construction of the borderland infrastructure came under the responsibility of the State Border Guard. The Agency’s task in constructing the borderland was confined to arranging the ownership of the borderland land plots and carrying out centralised procurement procedures.
The audit found that major deviations from the construction design affected the completion of the construction of Latvian-Russian borderland infrastructure on time and there is no reason to justify failure to finish the work by prolonged expropriation process of land along the state borderland, as the Ministry of the Interior has often indicated.
By accepting the changes proposed by the builder and major deviations from the approved construction design, the State Border Guard has not fulfilled the obligations of the construction contracting authority specified in the General Construction Regulations.
Illegally cut and lost trees, late and questionable accounting of felled timber
The State Border Guard had no legal basis for carrying out the construction work of the state borderland on a wider area than the 12 meters prescribed by the Cabinet of Ministers. The approved construction design did not provide for the removal of overgrowing, destumping, or land planning work outside the defined 12-metre wide zone. However, the audit findings prove the opposite that the work was carried out on significantly larger areas. For example, if the approved construction design provided for 5 hectares of land planing, then due to the work carried outside the 12-metre wide zone 135 hectares would be smoothed.
Work on significantly larger areas also involves deforestation in areas adjacent to the state borderland. There is no reason to consider deforestation outside the 12-metre wide state borderland be the removal of overgrowth to which the Forest Law and its secondary laws and regulations do not apply. However, one has carried out forestry activities illegally, that is, without a forest survey and without receiving the certificate of felling.
As the forest survey has not been done, the State Audit Office cannot assess the total amount of illegally logged timber and its value. In the meantime, one has been felled forest on the area of approximately 33 hectares only in four of the randomly sampled land plots. In addition, the volume of logged timber is significantly larger than the State Border Guard records. In those four land plots, at least 5,530 cubic metres of timber has not been recorded and are lost for 191,393 euros thus causing the loss to the State.
Tree felling at the border was started already in 2015, but the State Border Guard carried out the timber survey and assessment for the first time only in spring 2019. The State Audit Office holds that the Ministry of the Interior, the Agency, and the State Border Guard committed negligent, uneconomic, and unlawful actions in such a manner because no procedure for evaluating, accounting, and expropriating of timber obtained during the construction of the Latvian-Russian borderland was established in due time. In addition, the State Audit Office could not obtain sufficient assurance even on the validity of the accounted timber, as the evaluation of different experts varied. In the same stacks, an external expert engaged by the State Audit Office surveyed 26% more timber and evaluated it 23,152 euros more than an external expert engaged by the State Border Guard. Similarly, one has failed to act duly to sell at least the timber stored in the state borderland at the highest possible price, so that it can be sold now only as firewood at best.
Unnecessarily enlarged borderland areas
The audit also discovered violations of laws and regulations in determining the area required for the borderland. The fact that one transferred land plots to the Ministry of the Interior for the construction of the state borderland of considerably larger areas than required for the construction made it possible to carry out construction work and fell forest in considerable volumes.
The State Land Service is also involved in the process of determining the land areas needed for the borderland. For example, the audit sample includes a case of unjustified expropriation of private land according to the conclusion of the State Land Service in 2015. One expropriated 10 hectares more land from an individual additionally. Although this conclusion was drawn up in response to a request of the Agency, none of the preparatory work carried out previously to determine the area to be expropriated for the borderland identified the need for expropriation of land from private individuals at the specific site in addition to the 12-metre wide land plot already in the possession of the Ministry of the Interior. It resulted in additional expenses incurred by the state budget while paying indemnity to the individual for the expropriation of real estate of 14,675 euros.
There are no cost savings in replacing wooden pathway with woodchip cover
One of the aims of the construction of the borderland is to enable border guards to move along the borderland by motorized vehicles in all and any weather conditions. The approved borderland construction design anticipated the construction of wooden pathways made of pressurised impregnated boards for 77.5 km costing 7.94 million euros, but the pathway will be only 6.7 km long costing 1.24 million euros. For the rest of the trails, wooden pathways are replaced by a chemically untreated woodchip cover of 69 575 m3 costing 3.44 million euros.
Although the State Border Guard believes that there is an economic justification for changing the trail covering material, estimates of running costs suggest that trails made of woodchip bed will be more expensive to operate. Their lifetime will not exceed five years, so one will have to restore the trails completely up to four times during the 20-year lifetime envisaged in the design order so that border guards could move along the borderland in all weather conditions, for instance, by quadricycles. According to the calculations of the auditors, the State Border Guard will incur an additional cost between 10 and 13 million euros in the following 20 years.
Moreover, the State Border Guard has approved the solution of woodchip trails by disregarding the provisions of the General Building Regulations about making the changes in the procedure of construction design supervision, performance of an expert examination, and submission of its opinion and changes to the construction design to building authority. The State Audit Office considers that 3.44 million euros on woodchip- covered trails have been spent illegally, id est, opposite to the provisions of laws and regulations and the Law on Prevention of Defalcation of Financial Resources and Property of the Public Entity.
Procurement in the interest of one tenderer
One has not identified any violation in the procurement procedure for construction work, but the auditors conclude when analysing the changes in the volume of construction work carried out that such major deviations from the concluded general agreement are not permissible in accordance with the Law on Public Procurement. Such voluminous changes required organising a new procurement.
The audit revealed that the changes for work required during the procurement of the construction work of the borderland most probably have been done in the interest of the winning tenderer. The bid prices of the winning tenderer for construction work, whose amount was initially insignificant but increased several times during the construction, were higher than those of other tenderers, and vice versa – the bid prices for the work originally intended to be voluminous but significantly reduced during the construction were lower than the ones other tenderers offered. This kind of price offer exactly was the decisive factor for “Ceļu būvniecības sabiedrība “Igate”” Ltd to win in the tender.
If the tender had indicated actual volume of construction work, another tenderer would be awarded the contract offering a total contract price being 5.87 million euros less than the total contract price offered by the successful tenderer. When assessing specific costs, the auditors conclude that other tenderers would have constructed woodchip-covered trails for the total sum of 430 thousand euros to 1.33 million euros instead of 3.44 million euros, while the land planing could have cost between 309 thousand euros to 1.45 million euros instead of 3.51 million euros.