Rubesa versus the Baltics

Photo: Mihkel Maripuu

Desire to put the supervisory board and shareholder countries in their place is about to cost Latvian Baiba Rubesa her position at RB Rail.

The joint company’s supervisory board is set to weigh CEO Rubesa’s powers when it meets in Tallinn tomorrow. Latvian daily politics might be the only thing able to leave Rubesa with her job for the next seven months which is when her contract will expire.

RB Rail shareholders Estonia and Latvia expressed lack of confidence in Rubesa in February. Latvia remained impartial. The company quickly communicated the CEO would not resign.

“The supervisory board will discuss the tasks of the CEO and the shareholders’ expression of no confidence,” said chairman Riia Sillave. “I realized the CEO has a different vision even before I chaired my first supervisory board meeting. I asked her whether she would be willing to revise her position. She said no.”

The Estonian economy ministry said that while Rubesa’s removal is not a separate goal, a competition to find a new chairman of the board needs to be held.

Firing the CEO would not impact management as the supervisory board finds the board capable. Tasks would be taken over by other board members – Lithuanian CFO Ignas Degutis, Latvian executive manager Kaspars Rokens, and as of yesterday Estonian CTO Mart Nielsen.

Rubesa’s strong character and energetic performance made her look as the woman who will pull taught the ribbon to open Rail Baltic in eight years’ time.

What proved fatal was her overreaction to the stubbornness of Lithuanians. The problem child of the Rail Baltic project is a section between Kaunas in Lithuania and Poland that is too winding to accommodate high speeds.

Lithuanians are against its reconstruction as representatives include people responsible for building it in the first place. It was a past business plan of the Lithuanians to transfer goods from the Russian railroad to the European one in Kaunas, and the entire RB project came as a disappointment for local railroad tycoons.

When Rubesa hit a wall in trying to convince Lithuania, she started speaking out against all three Baltic countries in public and the European Commission. Rubesa wants earlier agreements ratified by the three parliaments changed so that all procurements would be governed by her.

As things stand, Rubesa is responsible for coordination, design, and the business plan. The joint company will procure communications and electrical systems in cooperation with the three countries and organize procurements necessary for the superstructures of the railroad – buying the rails for example. The countries will see to the construction of the track, support infrastructure, terminals, and depots for example.

If Latvian representatives of RB Rail were also convinced Rubesa had to go late last year, they withdrew in February. Latvians love Rubesa as she is seen as the symbol of anti-corruption efforts in the country. Canada, Statoil, and Volkswagen (Rubesa has lived and worked in Canada and Statoil and Volkswagen are her past employers – ed.) are aspects of Rubesa’s life that make every Latvian bow their head.

“There is no one as competent, experienced, and honest in Estonia, Latvia, or Lithuania as Baiba Rubesa,” one Latvian tech journalist told Postimees.

Latvia is headed for parliamentary elections in October, and politicians do not want to go up against the well-loved Rubesa.

Things started turning sour in November last, when Rubesa told the European Commission’s project development organization of delays in the RB project and that countries are not doing enough to keep to schedule.

The general design tender was supposed to take place in 2015 but was only finished now for example. The task of the survey for extending Tallinn’s tram line to the Old Port was supposed to be ready in 2016, while the solution was reached in early 2018.

RB Rail employed 20 people in October last, while a proposal to hire 147 additional employees was made in September. The company has promised to hire 51 people today and just 74 by the end of 2018.

This situation is made possible by the fact that RB Rail’s management board lacks power to make important decisions independently and must coordinate every expense over €5,000 with the supervisory board. Lithuanians are contesting the company’s plan to hire railroad engineers as they claim they have the necessary experts.

Despite the delays looking ugly, mishaps were anticipated and do not jeopardize the completion of the railroad.

“Differences of opinion between the management and supervisory boards that came to light in February are not momentary desires of shareholders but are rooted in what the countries have agreed on,” Sillave said.

“The agreement between the countries first and foremost concerned use of state budget assets. The states are reluctant to alter the previously agreed-upon work allocation and move all activities to the joint company. It concerns large chunks of state budgets that would no longer be controlled by parliaments should prior agreements be altered,” she added.

Rubesa launched a public media campaign to garner support for her ideas. She explained to the Latvian media how some supervisory board members made decisions sitting on two chairs.

“I’m constantly faced with meddling by supervisory board members in the procurement process and hiring of board members,” Rubesa told the Latvian press.

The economic crimes unit of the Latvian police launched an investigation concerning meddling in the company’s activities and a conflict of interest between shareholders based on Rubesa’s statements in early March.