Latvian government seizes control of main ports after U.S. sanctions

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Latvian government seizes control of main ports after U.S. sanctions

Latvian government seizes control of main ports after U.S. sanctions

RIGA/MOSCOW (Reuters) – Latvia’s parliament on Thursday passed legislation to take control over the Baltic country’s two biggest ports in an effort to keep them open after U.S. sanctions against a Latvian oligarch threatened operations.

Latvian politician and businessman Aivars Lembergs and four entities that he owns or controls were hit by U.S. sanctions this week on corruption allegations. Lembergs called the allegations “fake news”.

The entities are connected to the Ventspils port and, to a lesser degree, the port of Riga. Ownership of the two ports was previously equally split between the local municipality and the central government, and their boards consisted of both locally and nationally appointed members.

“The task is to separate the respective ports of Ventspils and Riga from any possible impact of both the individuals and legal entities mentioned in the sanctions,” Transport Minister Talis Linkaits told to Reuters on Thursday.

“Under the law changes, both Riga and Ventspils will be supervised by four representatives appointed by the government,” he added.

Ventspils is Latvia’s second biggest port after Riga and is a major oil product export route for Belarus, an ex-Soviet country otherwise dependent on financial support from Moscow.

Earlier on Thursday Latvia’s financial watchdog said the sanctioned entities related to Latvia’s Ventspils had been given 30 days before the sanctions would take effect.

“We are communicating with the financial sector more now, but if there are companies working at the Ventspils freeport, they have 30 days to continue their operations, there are no changes for now,” Santa Purgaile, head of the Latvian banking watchdog, told at a news conference.

Purgaile also said bank accounts were not closed at any financial institution for the Ventspils Freeport Authority “but their (accounts) supervision will be strengthened.”

She also said Latvia might ask Washington to extend the 30-day period to avoid disruptions.

Latvia has been hit by a number of high-profile financial scandals, such as bribery accusations against central bank governor Ilmars Rimsevics and a shutting of ABLV bank on money laundering accusations.

Almost 10 million tonnes of oil products were exported via Ventspils last year and between 35 to 50 oil product tankers enter the port each month, according to the port’s data. The port also exports coal, grain, chemicals and other products.

A European oil products trader told Reuters ship owners were currently evaluating risks of entering the port as there is no clarity on how sanctions may affect the port’s operations.

“They (ship owners) are afraid they won’t be let into the port but everything is fine at ours, we are putting a cargo for a loading today in Ventspils,” another trading source said.

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