LCSA issued a reprimand to Haralds Velmers, a member of the Supervisory Council of Olainfarm

In October last year, Haralds Velmers, a sworn advocate and a member of the Supervisory Council of JSC Olainfarm, received a reprimand from the Disciplinary Commission of the Latvian Collegium of Sworn Advocates (LCSA). A repeated reprimand may threaten expulsion from the Bar.

According to the information not officially confirmed for nra.lv, on October 26, 2020, the Disciplinary Commission decided to reprimand the sworn advocate H. Velmers.

Proceedings against the advocate started on December 16, 2019, when the Latvian Collegium of Sworn Advocates received a personal application requesting to evaluate the actions of sworn advocate H. Velmers in connection with acting in a conflict of interest, transferring client information to the other party and claiming compensation from the client not personally but by using SIA and an invoice issued by it, which sworn advocates are not allowed to do.

Internal issue of the Bar

Sandra Sleja, Chairwoman of the Ethics Commission of the Collegium of Sworn Advocates, confirmed that an application about H. Velmers had been submitted to the Ethics Commission for evaluation last year. The Ethics Commission decided to refer the case to the Disciplinary Commission for further evaluation. "The meetings of the Ethics Commission are closed, therefore I cannot disclose more detailed information," the Chairwoman of the Commission explained.

Asked whether the transfer of information obtained from a client to the other party constitutes a serious violation under the regulatory enactments regulating the professional activities of sworn advocates and ethical norms of sworn advocates, S. Sleja replied in the affirmative, but emphasized that she will not comment whether such a violation has been addressed in the Velmers case.

Flimsy deceit

From various sources, www.nra.lv managed to find out the reasons why H. Velmers' client decided to turn to the Latvian Collegium of Sworn Advocates for help.

At the end of 2017, a few days after the death of Valērijs Maligins, the main owner and member of the board of Olainfarm, his middle daughter Nika Saveļjeva turned to H. Velmers, a sworn advocate, for legal assistance. Relying on the advocate's honor and professionalism, N. Saveļjeva signed two agreements given by the advocate, without going into their content at that time. One was an agreement with the advocate for the provision of legal aid, which did not specify the amount of the advocate's fee, and the other was an agreement with SIA b2b konsultants owned by Milana Beleviča, a member of the board of SIA Olmafarm, stating that the fee for services provided was 5% from the value of the inheritance she received from her father.

In the summer of 2019, N. Saveļjeva received a notice from the Riga District Court that SIA b2b konsultants has filed a claim against N. Saveļjeva in court for debt collection. SIA b2b konsultants wanted to recover 3.6 million euros and litigation costs from N. Saveļjeva for services allegedly provided to her. At that moment, N. Saveļjeva realized that H. Velmers had deceived her. The content of the agreement with SIA b2b konsultants was identical to the agreement concluded with H. Velmers, and thus H. Velmers had created a situation where all the work that was intended to be performed by an advocate under the agreement, which does not specify the amount of fees, was in fact performed by the SIA for the payment agreed in the contract.

Duty to explain

The Advocacy Law of the Republic of Latvia and its essence stipulate that if a client has applied for legal assistance from an advocate, then this assistance must be provided by the advocate himself. An advocate may not entrust this work to someone else, as he or she has a duty of confidentiality with the client and it is the advocate who has the relevant professional qualifications to provide such assistance. In particular, sworn advocates are prohibited from providing legal assistance through a SIA company. If a contract is concluded with a SIA, then it means that in case of disagreement, the client has no grounds to complain, because the activities of the SIA cannot be appealed to the Latvian Collegium of Sworn Advocates. SIA also has no obligation of confidentiality. In addition, the law stipulates that the advocate must always specify exactly what the advocate's fee will be in the contract with the client. According to the Advocacy Law, an advocate is obliged to explain to the client what they will pay for and how much. Importantly, the advocate's invoice to the client is also an enforcement document. This means that if the client has not paid the bill issued by the advocate, the advocate does not have to go to court and bring an action for debt recovery. An advocate can submit his invoice to a bailiff, who blocks the client's accounts if the invoice (debt) is not paid. Therefore, the advocate must carefully explain the nature of the remuneration to the client to avoid any misunderstandings at a later stage.

Ignoring the above, H. Velmers had stated in his contract with N. Saveļjeva that he would agree with the client on a royalty after the work. This is a gross violation of the ethical norms of sworn advocates. H. Velmers' plan was obviously simple - not to indicate the amount of the fee in the agreement concluded with H. Velmers, so as not to intimidate the client, but at the same time give her to sign the agreement with SIA b2b konsultants with the idea of ​​asking however much he wanted from her based on an agreement with SIA b2b konsultants. If H. Velmers had demanded those 3.57 million euros from the girl as an advocate, that would have been an ethical breach, since the amount of that fee had not been agreed in the contract. Apparently, that is why this deception with the agreement with SIA was made, for the operation of which there are no grounds to complain to the Latvian Collegium of Sworn Advocates.

Serving both parties

N.Saveļjeva's complaint was investigated by the Latvian Collegium of Sworn Advocates for nine months. At the same time, a lawsuit took place in the Riga District Court with SIA b2b konsultants and another lawsuit with the other heir, V. Maligins' youngest daughter Anna Emīlija Maligina, whose interests at that time were contrary to the interests of N. Saveļjeva. An unforeseen incident took place that exposed H. Velmers. A. E. Maligina lodged an electronic document with the court, in which she had forgotten to remove Track Changes. The corrections made in Track Changes showed that H. Velmers had made corrections to the document. Thus, H. Velmers' client N. Saveļjeva saw that her advocate, with whom she had a valid contract for the provision of legal aid at that time, was correcting the legal documents of the other party. This was communicated to the Latvian Collegium of Sworn Advocates. H. Velmers tried to trick his colleagues by saying that he had made no corrections, that a stranger used his computer. These lies angered the Latvian Collegium of Sworn Advocates because, in accordance with the rules of professional ethics of a sworn advocate, a sworn advocate must not allow a client's cases to become known to third parties and the advocate must not take the obligation of complete confidentiality lightly. Therefore, the argument that some unknown person has used the lawyer's computer is a breach of ethics, as it automatically violates the confidentiality of the information entrusted by the client.

The reprimand was not enough

The Disciplinary Commission, evaluating the materials received about H. Velmers, has decided that the colleague has violated the second part of Article 2.2 of the Code of Ethics of the Sworn Advocates, as well as Article 5.3 of the Code of Ethics. The Disciplinary Commission imposed a disciplinary sanction on H. Velmers - it reprimanded him.

The second part of Article 2.2 of the Latvian Code of Ethics of the Sworn Advocates states: "In both professional and private life, the advocate must refrain from any conduct or action which might embarrass his profession, call into question his dignity, integrity, fairness and reliability."

Article 5.3 says "The advocate has a duty to avoid conflicts of interest and the risk of conflicts of interest must be eliminated promptly."

Although H. Velmers had been reprimanded for passing on information obtained from a client to the other party and providing legal services to both parties at the same time, having a conflict of interest, this did not deter the advocate from taking the next move that is questionable from a legal and moral point of view.

Having acted dishonestly with both heirs of V. Maligins, after they fixed their relationship and joined at the end of April this year, H. Velmers joined M. Beļeviča and Czech entrepreneurs, to whom M. Beļeviča intended to sell 42% of Olainfarm shares owned by SIA Olmafarm.

At the end of April, the Czech company Black Duck Invest announced that it had become the largest shareholder in Olainfarm. Police thought otherwise and detained at least three people, believing the deal to be fraudulent. The documents at the disposal of the TV show "Nekā personīga" show that H. Velmers and Kārlis Krastiņš, members of the Supervisory Council of Olainfarm, wanted to get the shares together with the Czechs.

Thanks to the actions taken by the State Police to stop the fraud in connection with the attempt to transfer 42% of Olainfarm's shares to the Czech company Black Duck Invest, the fact of H. Velmers receiving a reprimand from the Disciplinary Commission of the Latvian Collegium of Sworn Advocates also came to light.