OREANDA-NEWS. September 23, 2009. The public joint stock company Latvijas kugnieciba (Latvian Shipping Company – LASCO) has sent official applications to a number of public authorities of the Republic of Latvia, requesting to verify lawfulness of acquisition transaction of 27.55% LASCO shares and the possible tax evasion in the activities of JSC International Baltic Investments Ltd. (IBI). The applications drawing attention to facts of the possible fraudulence have been addressed to the LR State Revenue Service, the Office for Prevention of Laundering of Proceeds Derived from Criminal Activity, the Financial Police, the Economic Police and Register of Enterprises. LASCO points at contradictions between IBI’s publicly expressed claims regarding the title for the stock of LASCO shares worth at least 55 million lats and the official financial documents of IBI that fail to reflect in any way upon the mentioned shares and their title or the as if concluded transaction with the shares, or whether any taxes have been paid to the state.

IBI is the same firm that has been claiming to be an LASCO shareholder for a long time, at the same time making to seriously question their legal title to these shares that have been arrested in the course of criminal proceedings for defrauding several tens of millions US dollars from LASCO – the current IBI officials are also very likely to be involved in this fraudulent scheme. Although IBI publicly claims to be holder of LASCO shares, the official annual report of IBI for 2008, which is drawn up in accordance with standards of the Republic of Latvia and with international accounting standards, clearly attests that IBI does not regard itself as holder of LASCO shares.

Research of market and public opinion is the officially specified main activity type of IBI, which as if owns shares of the international shipping company LASCO. According to the annual report of IBI for 2008, the company’s shareholders are Arnis Nicgalis, Martins Kveps and Heidelberga  Ltd. Income of IBI in 2008 constituted 0 lats, but expenses/losses – 31 lats. This firm has not paid a santim in taxes in 2008 – it has failed to pay the social, personal income, or corporate income tax. It results from the report that, possibly to evade taxation, IBI has failed to pay remuneration to Management Board and Supervisory Council, or the Accountant. At the same time, IBI itself owes the Management Board more than 5,000 lats, although the funds of IBI constitute 20,000 lats according to the report. The only specified payment to the state budget is 7 lats, yet even this amount apparently has not been paid by IBI, as it is reflected in the creditor section of the balance sheet.

LASCO filed a claim statement to the Riga Regional Court already in spring of 2009, requesting to invalidate the transactions with LASCO shares between IBI and offshore companies Ojay Limited (Ojay) and Eastgate Properties Limited (Eastgate). Documents at disposal of LASCO clearly indicate that the transactions with LASCO shares that have as if taken place between the said companies are actually of manipulative character with a purpose to hide property, which has been acknowledged also by an official of the Economic Police Department of the Central Criminal Police Department of the State Police in 2008 within framework of criminal proceedings. Court has

accepted this claim statement of LASCO for reviewing, and the first court hearing is to be held in December 2009.

The nature of the previously made fictitious transactions is demonstrated by the fact that shares of Ojay and Eastgate were transferred to IBI account already on February 1, 2008, although the transaction was legally concluded only on February 4, which is confirmed to LASCO in a letter by IBI itself. According to standards of the Civil Law, a contract can be regarded as completely concluded only when a complete agreement on relevant components of the transaction has been reached between the contracting parties. Also according to Law on the Financial Instruments Market, dishonest dealings and market manipulations with financial instruments are forbidden.

Moreover, on February 7, 2008, LASCO received an announcement from IBI dated with the previous day about gaining substantial direct interest of 27.55% or 55,099,352 bearer shares in LASCO, indicating February 4 of the same year as the date of obtaining these shares. On February 11, 2008, LASCO received announcements also from Ojay and Eastgate that on the same date, February 4, also these companies have gained substantial interest in LASCO in the same amount of shares as previously indicated by IBI. Heidelberga audits Ltd was specified as return address for the two announcements of offshore companies, whereas the announcement on behalf of IBI was signed by A.Nicgalis – one of the owners of Heidelberga audits Ltd. No corrections or specifications to these conflicting announcements excluding one another have been received by LASCO until this very moment.