Search for answers amid the rubble

Search for answers amid the rubble

Dr Ignas Staskevicius, former chief executive, spokesman and shareholder in Lithuania’s Maxima Group, talks to Dalius Simenas about the fallout from last November’s Riga supermarket tragedy

What consequences – material and otherwise – has Maxima Group faced after the collapse of the building containing your Maxima store in Riga?

It was an unprecedented tragedy and a huge blow to the company. 54 persons died after the roof of the building with a “Maxima” logo on it collapsed. We lost five of our employees, and many of the people killed there were our customers. You can imagine the enormous damage to the company’s name. It was aggravated by several mistakes of the former management of a Latvian subsidiary.

The direct financial losses depend on a final settlement with insurers, but we realise this disaster will cost us many millions.

How are you quantifying the extent of your liabilities at this stage?

We estimate that the building that collapsed, the assets destroyed, and the other costs directly incurred in the aftermath of the tragedy are over LTL10m (€2.9m). Our commitment to pay regular compensations for children who lost their parents until they are
18 years old would add at least another LTL 5m (€1.4m).

Losses to our reputation, the brand name, and lost clientele are much more difficult to estimate, but they are also considerable.

What lessons have you and your Maxima partners learned from this terrible incident?

We received a very tough lesson. The company was too ambitious to grow and too arrogant with respect to society.
Now we are changing this attitude at all levels. We will lift the organisation to the status where every Maxima worker feels safe, comfortable and confident in their workplace. That will give more comfort to our customers and this way their trust will be regained and nurtured.

Dalia Grybauskaite, the Lithuanian President, who visited the site in January, stressed that Maxima should have shown more sensitivity immediately after the tragedy. Have you reviewed Maxima’s poor disaster PR, in which you were seen as offering self-interested excuses?

Of course, we were very disappointed not only with the capability of the communications team, but also with a lack of confidence from the whole management in the days after the tragedy. The people responsible proved confused and incompetent, despite having all necessary resources and support from the shareholders. As a result, the former managing director of our Latvian subsidiary

Mr. G.Jasinskas was fired and a crisis’ committee was established. We are revising the structure of the group to achieve the goals mentioned above and to avoid similar difficulties in future.

What advice would you give businesses to avoid PR mistakes in a crisis?

I would hesitate to give any advice of that sort. It is still too early to sum up our experience. The one clear statement I can make is that honest and brave decisions work best in any tough situation.

You said to the press that it may take another three to four months to find the cause of the collapse. However, you have also hired independent experts for that purpose. What have they reported so far?

We still know very little. Prosecutors and policemen do not like to disclose information too early. Our internal investigation provided us with some clues as to why the fire alarm was sounding for an hour before the collapse and similar things. But we still do not know the answer to the main question – why did a new building collapse? Being a party to the tragedy, Maxima wants an answer to this most of all, but we understand it might take years
to receive the official conclusions.

What happens when you have the results of the investigation? What are the scenarios in your mind? Is Maxima Group planning a change of branding? A sale?

Or maybe further consolidation of business in Latvia?
I do not see any fixed link between the results of the trial and Maxima’s strategy. We know already that there is no suspicion that we are responsible for the collapse itself. The questions about that are directed to the builders, architects and developers. I would
like to see the Maxima chain as a long term player in the Latvian market.

You are now leading NDX, the international business development arm of Vilniaus Prekyba, owner of Maxima retail chain. What opportunities do you see in the Baltic States in the coming years?

To be precise, NDX does not own any retail chains. This division produces different
canned foods in Poland, Slovakia and Czech Republic.

I came to lead a crisis management group for Maxima just on a temporary basis. To answer your question, I fancy Poland a lot. That is a saturated, competitive market and that is why it is the Premier League for players like us. The Baltics are small, divided and relatively cosy, but their [growth] potential is limited.

What is your next big ambition as an entrepreneur? What projects do you see ahead? Is VP, for example, considering getting back to energy projects?

Our group has gained a vast and deep experience in business dealing with consumer goods - retail and production. I guess, we prefer to remain a specialist in this field and grow our volumes consistently.