The council of A/s 'Latvijas valsts meži' (LVM) welcomes the prompt initiation by the company's management board of an audit into the legality and economic viability of long-term logging contracts (IML) and the IML conversion process established in 2013, and urges that any potential shortcomings be addressed as soon as possible. The IMLs concluded by AS 'Latvijas valsts meži' must comply with good governance principles and be economically justified.

LVM will evaluate all existing IMLs to check whether there are grounds for their termination. An assessment will also be made of how the procedures stipulated in regulatory acts were applied during the IML conversion process.

The LVM council instructed the management board to prepare a report for the shareholders' meeting in connection with the prosecutor's warning regarding the impermissibility of violations in the long-term logging contract conversion procedure.

Chairman of the council of A/s 'Latvijas valsts meži', Edmunds Beļskis: 'We are pleased that at least the latest or third IML conversion process initiated in 2022 was implemented in accordance with the requirements of regulatory acts. This is confirmed by the opinion provided by Dr. iur. Jānis Kārkliņš, Head of the Department of Civil Law at the University of Latvia's Faculty of Law. Consequently, the in-depth investigation initiated by the management board must provide answers regarding the risks identified in the prosecutor's warning, specifically at the initial stage of the IML conversion process and in the actions of the persons involved.'

The decisions and actions taken by the LVM management board and council in the period leading up to 2013 are the primary cause of the prosecutor's office's conclusions regarding the IMLs and the IML conversion process.

Following receipt of the prosecutor's warning, the LVM board decided to launch a comprehensive audit of the IML and IML conversion process. Furthermore, the board promptly conducted an independent preliminary legal assessment of the long-term logging contract conversion process and concluded that an open and fair IML conversion process, which would comply with good governance principles, may not have been ensured.

The prosecutor's office previously concluded that the long-term logging contract conversion process selected in 2013 was not optimal and questioned whether LVM's governing bodies have, to date, done everything necessary to address the issue of IML conversion in accordance with the operating principles of governing bodies and public capital companies, including those regarding the conducting of public procurement.