The court evaluates the payment of dividends of “Latvijas gas” to Russian companies / Article

Disputing the payment of dividends to two companies

With the start of Russia’s full-scale invasion of Ukraine, energy prices around the world skyrocketed. And it also helped energy companies, including Latvijas gāzei, to make good money. Both this and the profit of the undivided company in previous years allowed “Latvijas gāzei” to pay out a significant amount to its shareholders – almost 110 million euros.

Even two years after the start of the war, exactly half of the company’s shares belong to the Russian state energy giant “Gazprom” and “Itera Latvija”, which is actually controlled by another aggressor company “Rosneft”.

Lawyer Mārtiņš Kvēps challenged the legality of the dividends paid to these two companies in court. He believes that Latvia is being humiliated in this way. Moreover, state institutions, except for the Office of the President, do not consider this a problem.

Lawyer Kvėps bases his arguments in three parts, believing that, firstly, the payment of dividends was not in accordance with public order and good morals; secondly, the “Itera” company, not disclosing its true ownership structure for a long time, does not have the right to participate in shareholders’ meetings, which means that there is no quorum for decisions; thirdly, it is a violation of European Union sanctions.

Kvėps said: “If a Latvian company in Russia would like to receive dividends, pay out from its business in Russia to Latvia, they cannot do it. [Krievijas vadonis Vladimirs] Putin has passed two decrees that say: if you want to receive dividends, it is not about state companies or companies that, God forbid, are at war against them, it would probably not be possible at all, you can only open an account in a Russian bank , receive dividends in rubles and, of course, spend money only in Russia. Namely, the Russians have defined their national interests perfectly, that no money that can be used against them will go abroad. On the other hand, the naive Latvians, who are the ones in real danger, – no problem, come, earn. Well… let’s not mix business with politics, as “Latvijas gāze” said in court the day before yesterday.”

The exact amount paid to Russia is unknown

“Latvijas gāze” did not name the exact amount that was paid out in dividends to Russia last year. The company was not ready to explain its position in a face-to-face interview, giving its opinion on the legality of the payment to the companies “Itera” and “Gazprom” in writing.

The dividend payment of “Latvijas gas” to “Gazprom” and “Itera” invited the organization “Entrepreneurs for Peace” to develop an initiative that would determine the imposition of a 90% tax on the payments of any company to Russia. If it were applied, Russian companies would receive only a small part of the dividends obtained here.

Lawyer Jānis Taukačs, the representative of the organization “Uznemēsi mieram”, lawyer, said: “The fact of the payment of dividends certainly raised a lot of questions. And one of them was: why are such costs something that we could not somehow at least slow down, also seeing the experience of other countries in the same In Germany and the like.”

The court of economic affairs, which is currently examining the claim of lawyer Kvēps against “Latvijas gāzi”, did not provide further comments on the case. Notification of the decision is set at the end of the month.

The LETA agency previously wrote that the net turnover of the “Latvijas gas” concern last year was 159.819 million euros, which is 4.4 times less than in 2022, when natural gas prices experienced a huge increase, and the company also suffered a loss of 56.911 million euros compared to the profit a year earlier . In 2022, the turnover of “Latvijas gas” was 702.604 million euros, and the profit – 40.8 million euros.

LG’s largest shareholders are Russia’s Gazprom (34%), Rietumu banka (28.97%), the German company Uniper Ruhrgas International GmbH (18.26%) and SIA Itera Latvija (16%).