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Latvia

Transparency in State Management (LV0037)

Overview

At-a-Glance

Action Plan: Latvia National Action Plan 2017-2019

Action Plan Cycle: 2017

Status: Active

Institutions

Lead Institution: Pārresoru Coordination Center

Support Institution(s): Environmental Protection and Regional Development MEASURE THE IMPLEMENTATION OF RELEVANT PARTNERS Association "Baltic Corporate Governance Institute" Center for Public Policy "PROVIDUS" Latvian Free Trade Union

Policy Areas

E-Government, Fiscal Transparency, Legislation & Regulation, Open Data

IRM Review

IRM Report: Latvia Design Report 2017-2019

Starred: Pending IRM Review

Early Results: Pending IRM Review

Design i

Verifiable: No

Relevant to OGP Values: Access to Information Technology

Potential Impact:

Implementation i

Completion:

Description

OPENNESS AND ACCOUNTABILITY OF PUBLIC
MANAGEMENT OF THE PARTIES The corporation
DEADLINE:
2017 2nd half - 2019 1st half
WHAT ARE THE STATE AND THE PUBLIC INTEREST ISSUES WHICH HELPS MEETING THIS
COMMITMENT?
Public persons capital - state and municipal enterprises - plays an important role in the national economy,
as they provide essential services and goods production and management of the national development and
safety-critical assets. In 2015 the state capital total assets was 8.1 billion euro. State capital is also an
important employer: in 2015, they worked 52 239 employees.
Public party capital like private sector workers companies should ensure their operational efficiency and
professionalism and be economically sustainable and accountable. However, they also comply with the state set
the general strategic goals and objectives and to ensure that public resources are used and managed in the public
interest so as to bring the country and the public the greatest benefit. It is therefore particularly important to ensure
an open, responsible and fair management of public persons of limited liability companies. OECD State-owned
enterprise management guidelines 59 states that:
• State capital required to meet high standards of transparency and must be subjected to the same high
quality accounting, disclosure and compliance standards as the stock exchange quoted firms;
• national capital to provide financial and non-financial information about the company in accordance with the
high quality internationally recognized standards of corporate disclosure, particularly in areas that are important
for the state as owner and the public;
• the responsible authority ensures continuous reporting for the State capital and annually publish a
single report as well as make up a publicly accessible Web site.
January 1, 2015 came into force in public person shares of limited liability companies and Management Act,
which was followed by significant reforms in corporate governance. For example, it was overrated state
participation capital companies, limited liability companies set the overall strategic objectives, work began on
capital companies medium-term strategies were significantly improved access to information about public
persons and capital
59 OECD. "OECD Guidelines on corporate governance of State-Owned Enterprises". Paris: OECD Publishing, 2015th
View: http://www.oecd.org/corporate/guidelines-corporate-governance-SOEs.htm
10th
COMMITMENT
LATVIAN OPEN MANAGEMENT THIRD NATIONAL ACTION PLAN 48
their performance, developed a clear and open person public limited liability companies of board members
for the selection and appointment procedure, the largest state capital refurbished councils, strengthened
corporate performance review and disclosure mechanism.
Center for Public Policy "PROVIDUS" points out: "the introduction of the reform, the first stage of a significant
increase in state enterprises openness. The public has the opportunity to gain a wealth of information on public
enterprises - government structure, key financial indicators, as well as operational objectives. " 60
Pārresoru Coordination Center (hereinafter - PKC) since 2015, the holders of public limited liability
companies and the state capital of management coordinating body tasks. One of PKC tasks is to inform
the public and make accessible information on the state capital operation and its results. 2017 PKC
tīmekļvietni- created a database of state capital management 61, which gathers information on the regulatory
framework and its changes, capital company performance and current events management issues.
Tīmekļvietni- database in the coming years need to improve, with the new information on the state capital.
An important contribution to the state capital management and operational transparency in ensuring that also
complies with the OECD guidelines, prepared by the PKC annual reviews of the national capital and
state-owned shares. So far PKC prepared statements for 2014 and 2015. Significant reports to constantly
improve. For example, a review of 2016 is intended to provide more information about each state capital, as
well as more non-financial information. 62
PKC also developed guidelines for public disclosure of information and public capital to shareholders, which may
be used as a useful road map to effectively and uniformly provide the public with material information about a
public person with share capital activity. Cabinet on 20 June 2017 approved amendments to the authentic
person with share capital and shareholding management law and forwarded to the Parliament. The bill intends to
extend the amount of information made public. State capital in addition to the existing requirements will be made
public statute, the board or council (if one exists) bylaws or equivalent document that regulates its work, and
information about each individual council (if one exists) and member of the board (ie. See. Professional work
experience, education, information on positions in other capital, The term of office). Also it provides that the
equivalent information as a public party capital will be made public and their dependent capital. If the bill
approved by parliament, the new requirements are essential to promote and facilitate it
effective implementation.
So far, the big national capital was under no obligation to disclose non-financial information. From 2017, the
obligation to provide for 2014 of 22 October the European Parliament and
60 Center for Public Policy "PROVIDUS", "Transparency - Transparency International". "State capital companies
governance reforms at the first assessment. " Riga 2017, p.35.
View: http://delna.lv/wp-content/uploads/2017/03/PROVIDUS-Kapitalsabiedribas-petijums-2017.pdf 61 View: http://www.valstskapitals.lv
62 Annual reports available in JCR Web site in English and Latvian. View: http://www.pkc.gov.lv/
LATVIAN OPEN MANAGEMENT THIRD NATIONAL ACTION PLAN 49
Council Directive 2014/95 / EU amending Directive 2013/34 / EU with regard to certain large companies and groups of
non-financial and diversity information disclosure. Directive reference is made to the European Parliament on 6 February
2013 resolution on "Corporate Social Responsibility - responsible and transparent business practices and sustainable
growth" 63 and resolution of "Corporate Social Responsibility - promoting the interests of society and the path to
sustainable and inclusive recovery" 64, which it recognized that non-financial information helps to identify, monitor and
manage business performance and impact on society.
Latvian companies have several examples of good practice, because they voluntarily provide non-financial information, such
as JSC "Latvenergo" and JSC "Latvian Railway".
WHAT IS COMMITMENT?
In order to improve the transparency and accountability of public limited liability companies in the management and operation of:
• continue to inform the public of the state capital management and operation, including encouraging non-financial
indicators and sustainability reports should be published;
• lead to additional disclosure requirements state capital intended for the Cabinet on 20 June 2017,
supported the amendment authentic person with share capital and shareholding management
law, effective implementation;
• promote transparency and accountability of the national and local government capital management and operation
by promoting best practices;
• improved and expanded PKC's Web-database of state capital management, including the state
capital profiles. Assess the possibility of the place and corporate non-financial data;
• promote cooperation with government institutions in order to ensure the exchange of the necessary
data;
• develop annual public reports to ensure they increase the use of information on national capital
and their work in the public interest, as well as those including an informative summary of each
state capital;
• estimate Options, through other countries' best practices, to build quarterly
reports on the state capital, the state as the owner quickly
and be able to receive data in a timely manner react potential risk cases;
• to promote the uniform application of law in transparency requirements for public capital
compliance as a national as well as local government and associated persons capital t. see.
giving advice;
• identify whether a sufficient amount and the quality of laws and regulations in certain state and
municipal capital disclosure requirements are met, and promote best practices.
63 See: http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P7-TA-2013-0049&language=LV&r
ing = A7-2013-0017
64 See: http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P7-TA-2013-0050&language=LV
LATVIAN OPEN MANAGEMENT THIRD NATIONAL ACTION PLAN 50
HOW TO COMMITMENT will be introduced and the solution to these problems?
The commitment will be implemented with the introduction of the development of activities and initiatives that focus on transparency and
accountability of public persons capital.
In implementing this commitment will contribute to raising public awareness and openness about public persons with share capital operation
and management and enhancement of responsibility.
For more information on state capital management may also publish open data portal or to arrange them in
the form of open data and to describe the open data portal (link with the plan's commitment to 3).
HOW TO MEET COMMITMENT OGP VALUES?
OGP commitment to two values - openness and accountability. Commitment will increase the transparency and
accountability of the community by providing more and better information about public persons capital, raising awareness of
the important role and contribution of the potential risks and thus promoting responsible and informed public persons of
limited liability companies management.
ADDITIONAL INFORMATION
Linking with international instruments
Commitment to promote compliance with the OECD Latvian State-owned corporate governance guidelines and the OECD
Principles of Corporate Governance.
INTERMEDIATE OBJECTIVES
1. State shareholding, which ensures that all statutory disclosure requirements, the proportion of all
public shareholders (result - 100%)
06.30.2018.
2. The national capital company, which provides all the statutory disclosure requirements,
The proportion of the total national capital
(Result - 100%)
31.12.2018.
LATVIAN OPEN MANAGEMENT THIRD NATIONAL ACTION PLAN 51
3. The national capital company management issues in a dedicated conference (result - 1
Conference every year)
31/12/2019
4. The national capital company that develops non-financial reports, the number (> 5)
31/12/2019
RESPONSIBLE PUBLIC AUTHORITIES
Pārresoru Coordination Center
OTHER MEASURES IN IMPLEMENTATION OF NATIONAL INSTITUTIONS
INVOLVED
Environmental Protection and Regional Development
MEASURE THE IMPLEMENTATION OF RELEVANT PARTNERS
Association "Baltic Corporate Governance Institute" Center
for Public Policy "PROVIDUS" Latvian Free Trade Union

IRM Midterm Status Summary

10. Transparency in Public-owned companies

Language of the commitment as it appears in the action plan:

Editorial Note: The Latvian government did not submit an official English translation of its 2017−2019 to OGP. Therefore, the original Latvian version as it appears in the action plan can be viewed below. For the full text of this commitment, please see the Latvia 2017−2019 action plan here: https://www.mk.gov.lv/sites/default/files/editor/atvertas-parvaldibas-plans2017.pdf.

Lai veicinātu atklātību un atbildību publisko kapitālsabiedrību pārvaldībā un darbībā:

  • turpināt informēt sabiedrību par valsts kapitālsabiedrību pārvaldību un darbību, tajā skaitā veicinot to nefinanšu rādītāju un ilgtspējas ziņojumu publicēšanu;
  • veicināt papildu informācijas sniegšanas prasību valsts kapitālsabiedrībām, kas paredzētas MK 2017. gada 20. jūnijā atbalstītajos grozījumos Publisku personu kapitālsabiedrību un kapitāla daļu pārvaldības likumā, efektīvu ieviešanu;
  • sekmēt atklātību un atbildību valsts un pašvaldību kapitālsabiedrību pārvaldībā un darbībā, popularizējot labās prakses piemērus;
  • uzlabot un papildināt PKC tīmekļvietni–datubāzi par valsts kapitālsabiedrību pārvaldību, tajā skaitā ar valsts kapitālsabiedrību profiliem. Izvērtēt iespēju tajā izvietot arī uzņēmumu nefinanšu datus;
  • veicināt sadarbību ar valsts pārvaldes institūcijām, lai nodrošinātu apmaiņu ar nepieciešamajiem datiem;
  • pilnveidot ikgadējos publiskos pārskatus, nodrošinot tajos arvien plašāku informāciju par valsts kapitālsabiedrībām un to darbu sabiedrības interesēs, kā arī ietverot tajos informatīvu kopsavilkumu par katru valsts kapitālsabiedrību;
  • izvērtēt iespējas, izmantojot citu valstu labo praksi, veidot ceturkšņa pārskatus par valsts kapitālsabiedrībām, lai valsts kā īpašnieks operatīvi saņemtu datus un spētu savlaicīgi reaģēt iespējamu risku gadījumos;
  • veicināt vienveidīgu likumdošanā noteikto atklātības prasību publiskajām kapitālsabiedrībām ievērošanu kā valsts, tā arī pašvaldību un atvasināto personu kapitālsabiedrībās, t. sk. sniedzot konsultācijas;
  • apzināt, vai pietiekamā apjomā un cik kvalitatīvi normatīvajos aktos noteiktās valsts un pašvaldību kapitālsabiedrību atklātības prasības tiek ievērotas, un popularizēt labās prakses piemērus.

Milestones:

10.1: Valsts kapitāla daļu turētāju, kas nodrošina visu likumā noteikto informācijas publiskošanas prasību izpildi, īpatsvars no visiem valsts kapitāla daļu turētājiem (rezultāts – 100 %)

10.2: Valsts kapitālsabiedrību, kuras nodrošina visu likumā noteikto informācijas publiskošanas prasību izpildi, īpatsvars no visām valsts kapitālsabiedrībām (rezultāts – 100 %)

10.3. Valsts kapitālsabiedrību pārvaldības aktuālajiem jautājumiem veltīta konference (rezultāts – 1 konference katru gadu)

10.4. Valsts kapitālsabiedrību, kas izstrādā nefinanšu ziņojumus, skaits (> 5)

Editorial note: For further analysis, milestones 10.1 and 10.2 are merged as one milestone since they do not have different measures or goals.

Start Date: 1 Jul. 2017

End Date: 30 Jul. 2019

Context and Objectives

This commitment continues from Latvia’s prior two action plans (2013−2014 [47] and 2015−2017 [48]). These commitments focused on examining and increasing transparency in selecting board members to state-owned enterprises (SOEs). In January 2015, Latvia undertook a reform of SOE governance by passing the Law on State Owned Enterprises. [49] Prior to this law, elections of SOE board members were not transparent and the process was highly politicized. Annual reports on SOEs were available for a price from the Enterprise Register. These reports offered information on financial data, but little on planned policy aims and development of the enterprise. Therefore, it was difficult to analyze the nonfinancial influence of SOEs. [50]

Besides passing the Law on State Owned Enterprises, the government also introduced new procedures for selecting board members, including announcing open calls, establishing a selection committee, and publishing the qualifications of candidates. The functions of the supervisory institution were delegated to the Cross-Sectoral Coordination Centre (CSCC), a government policy planning institution that reports to the prime minister.5 The CSCC developed a portal to release financial and other information on SOEs (such as annual reports, goals, and results of their public functions). [51] For more information, see the 2015– 2017 IRM end of term report. [52]

This current commitment aims to continue increasing transparency of SOEs as well as businesses where the state owns shares. During implementation of this action plan, the government will ensure that enterprises share more information with the CSCC monitoring, which will make it publicly available (Milestone 10.1). The CSCC will also organize two conferences (Milestone 10.2) and ensure that more than five SOEs publish nonfinancial reports (Milestone 10.3). Although the language of commitment is not explicit in how these milestones will be implemented, the action plan refers to the Law on State Owned Enterprises governance [53] and its amendments on the transparency of information. [54] These amendments call for publishing the new information, namely bylaws of company, bylaws for the boards and advisory boards, and information on members of boards and advisory boards (such as their professional experience, education, employment in other SOEs, and terms of their service). The law also asks for disclosure of nonfinancial information. Implementation of this commitment will ensure information related to the management of public resources is available to the media and general public (which was previously unavailable). Therefore, this law is relevant to OGP value of access to information.

Based on reference to the law, implementation of Milestone 10.1 is verifiable. If implemented, all SOEs and companies with government shares will disclose the requested information. Published in the CSCC’s portal, the information will be available for public to see possible political affiliations of the Board and Advisory members. Organizing annual conferences (Milestone 10.2) on governance of SOEs could be an important measure to improve use of public resources. However, the action plan does not provide information on the issues to be discussed or the planned results. It also does not say if it will be public or closed or if the proceedings will be made publicly available. The action plan does not reveal what nonfinancial information SOEs will have to publish. But it refers to EU directive 2014/95/ES which asks members to publish reports on the policies they implement in relation to environmental protection, social responsibility and treatment of employees, respect for human rights, anti-corruption and bribery, and diversity of company boards (e.g., age, gender, educational and professional background). [55] Since SOEs conduct public functions (e.g., hospitals), the commitment calls for disclosing their public benefit goals and annual progress toward these goals. Milestone 10.3 proposes that more than five SOEs publish nonfinancial reports (covering areas such as environmental impact, work conditions, gender balance etc.). This milestone is an important first step toward improved transparency but too limited for achieving transformative change. [56]

Civil society recommended that the current action plan improve public oversight of selecting management personnel for local government institutions, such as transport companies co-owned by local governments. In addition, an expert from the Baltic Institute for Corporate Governance (BICG)15 proposed several measures for more openness: updating data on enterprises quarterly (not annually, as is done now); and adding information to the database related to the public services delivered by the enterprises. So far, the database provides only general information on enterprises (such as the names of the shareholders and number of employees) and economic information such as income, profits, and expenditures, profitability and other financial indicators. The commitment in the current plan includes activities such as publishing nonfinancial data, disclosing public functions of SOEs, achieving better exchanges of data, publishing quarterly reports submitted by SOEs to help reduce time-sensitive risks, and building on best practices. However, it does not include local government institutions at this stage.

Next steps

The IRM researcher recommends that the next action plan focus on public monitoring of nonfinancial reports of SOEs. A new area for future Latvian action plans could be monitoring the environmental and/or social impacts of public resource management. Additionally, increasing awareness of public impacts of SOEs may increase public pressure for the government to require more than merely 5% of SOEs to publish data as currently required.

[47] Government of Latvia: Cabinet of Ministers, Open Government Partnership Action Plan of Latvia (OGP, 2012), https://www.mk.gov.lv/sites/default/files/editor/latvijas_pirmais_nacionalais_ricibas_plans_ogp_2012.g._eng.pdf.

[48] Government of Latvia: Cabinet of Ministers, Second National Action Plan of Latvia (OGP, 23 Dec. 2014), https://www.mk.gov.lv/sites/default/files/editor/ogp_2_plans_aktualizets_05.12.2016_eng_clean.pdf.

[49] Laws of Latvia, "Law on the Management of Public Shares and Capital Companies” (Latvijas Vēstnesis, 16 Oct. 2014), https://likumi.lv/doc.php?id=269907.

[50] Līga Stafecka, Valsts kapitālsabiedrību pārvaldības reformas pirmais izvērtējums: Sākums gudrai vērtības audzēšanai (Delna and Providus, Mar. 2017), http://delna.lv/wp-content/uploads/2017/03/PROVIDUS-Kapitalsabiedribas-petijums-2017.pdf.

[51] Cross-Sectoral Coordination Centre, “Management of State Capital Companies” (2019), http://www.valstskapitals.gov.lv/lv/.

[52] Zinta Miezaine, Independent Reporting Mechanism (IRM): Latvia End-of-Term Report 2015–2017 (OGP, 2017), https://www.opengovpartnership.org/sites/default/files/Latvia_EOT_Report_2015-2017_EN.pdf.

[53] Laws of Latvia, "Law on the Management of Public Shares and Capital Companies.”

[54] Laws of Latvia, “Amendments to the Law on the Management of Public Shares and Capital Companies” (Latvijas Vēstnesis, 15 Mar. 2018), https://likumi.lv/ta/id/297811-grozijumi-publiskas-personas-kapitala-dalu-un-kapitalsabiedribu-parvaldibas-likuma.

[55] European Commission, “Non-financial reporting” (accessed 26 Nov. 2018), https://ec.europa.eu/info/business-economy-euro/company-reporting-and-auditing/company-reporting/non-financial-reporting_en.

[56] Cross-Sectoral Coordination Centre, “Valsts kapitālsabiedrības, valstij piederošās kapitāla daļas, valsts kapitālsabiedrībām un to meitas sabiedrībām piederošās kapitāla daļas” (Jul. 2015),  https://www.pkc.gov.lv/sites/default/files/inline-files/VKS_01072015_lidzdaliba.pdf.


Latvia's Commitments

  1. Public Participation in Decision-Making

    LV0028, 2017, Capacity Building

  2. e-Legal Services

    LV0029, 2017, E-Government

  3. Open Data

    LV0030, 2017, E-Government

  4. Lobbying Transparency

    LV0031, 2017, Capacity Building

  5. Budget Transparency

    LV0032, 2017, E-Government

  6. Whistleblower Protections

    LV0033, 2017, Capacity Building

  7. Ethics in Public Management

    LV0034, 2017, Capacity Building

  8. Zero Bureaucracy

    LV0035, 2017, Legislation & Regulation

  9. Open Public Procurement

    LV0036, 2017, E-Government

  10. Transparency in State Management

    LV0037, 2017, E-Government

  11. Beneficial Owenrship

    LV0038, 2017, Beneficial Ownership

  12. Evidence-Based Governance

    LV0039, 2017, Capacity Building

  13. Starred commitment Concept Note on Publishing Data

    LV0018, 2015, Open Data

  14. Portal Drafting Legislature and Development of Planning Documents

    LV0019, 2015, E-Government

  15. Platform Unifying Gov. Webpages

    LV0020, 2015, E-Government

  16. Starred commitment Transparency of Selecting Candidates for the Boards and Councils of Public Entity Enterprises

    LV0021, 2015, Legislation & Regulation

  17. Supervising Officials Responsible of Public Resources

    LV0022, 2015, Anti-Corruption Institutions

  18. Sustainable Model of Financing NGOs

    LV0023, 2015, Civic Space

  19. Starred commitment Online Collection of Signatures on Referenda

    LV0024, 2015, E-Government

  20. Draft Law on Protecting Whistleblowers

    LV0025, 2015, Whistleblower Protections

  21. Assessment of the System of the Financing Political Parties

    LV0026, 2015,

  22. Code of Ethics and a Public Administration Employee’S Handbook for Public Sector

    LV0027, 2015, Capacity Building

  23. NGO Fund

    LV0001, 2012, Capacity Building

  24. Strengthen Social Partners

    LV0002, 2012, Public Participation

  25. Trade Union Law

    LV0003, 2012, Civic Space

  26. NGO Co-Working

    LV0004, 2012, Civic Space

  27. Public Engagement Model

    LV0005, 2012, Public Participation

  28. Internet Access Points

    LV0006, 2012, E-Government

  29. Public Service Assessment

    LV0007, 2012, Public Service Delivery

  30. Enhancing e-services

    LV0008, 2012, E-Government

  31. Transport e-services

    LV0009, 2012, E-Government

  32. Asset Disclosure

    LV0010, 2012, Asset Disclosure

  33. Lobbying Law

    LV0011, 2012, Legislation & Regulation

  34. Whistleblower Protection

    LV0012, 2012, Whistleblower Protections

  35. Public Subsidy Control

    LV0013, 2012, Private Sector

  36. State Owned Enterprises Management

    LV0014, 2012, Private Sector

  37. Single Platform for Government Websites and Information

    LV0015, 2012, E-Government

  38. Online Broadcasting From the Cabinet and Parliament

    LV0016, 2012, E-Government

  39. Website For Public Participation

    LV0017, 2012, E-Government